The Greenback Is Golden Again; Economic Troubles in Asia Spur Resurgence of U.S. Dollar
With Asian financial markets in turmoil, Europe in an economic funk and the price of just about everything falling around the world, it seems everyone wants to have and hold dollars.</br></br>In recent weeks, there have been reports of Russian housewives stuffing greenbacks into glass jars and secretaries in Singapore switching their savings accounts into dollars at local branches of Citicorp and American Express. Thai chambermaids have taken to pleading with hotel guests for tips in dollars, not baht.</br></br>Big financial players have also jumped into the act. Treasurers of giant corporations are scrambling to convert overseas profits back into dollars before they erode further in value. And central bankers in Argentina, Belgium, Canada, Australia and even Switzerland have been selling off gold reserves in favor of dollars and U.S. Treasury bonds.</br></br>All this demand for greenbacks has driven up the value of the dollar against most other currencies. In the past six months, the dollar has risen 4 percent against the German mark, 15 percent against the Japanese yen, 70 percent against the Thai baht, 90 percent against the Korean won and 195 percent against the poor Indonesian rupiah.</br></br>To a large degree, the dollar's ascent reflects flight from the economic problems in Asia to the relative safety offered by the U.S. economy and its financial markets. Were it not for the stabilizing influence provided by the dollar, economists say the damage from the crisis could have been even greater.