Hedge fund legend George Soros says the dollar isn’t about to lose its status as the world’s primary reserve currency anytime soon.
There’s “no attractive alternative” to the greenback, he says.
The euro, probably the number-two choice, has hit the skids thanks to debt woes in Greece, Spain and other European countries.
Central banks have slowed their purchases of euros, and traders have withdrawn $13 billion from European stock markets over the past five months, Bloomberg reports.
“The euro can fall further,” Neil Mackinnon, a former U.K. Treasury official who is now an economist at VTB Capital, told Bloomberg.
“Sovereign debt risk will continue to be a key theme.”
Top White House economic adviser Larry Summers agrees with Soros, saying in a recent speech that the dollar will center the world financial system for “a long time to come,” Bloomberg reports.
To guarantee the dollar’s strength, the U.S. must pursue strong economic policy, such as cutting the $1.4 trillion budget deficit, Summers says.
While Soros doesn’t see the dollar fading as a reserve currency, he says the greenback could benefit from a decline against the renminbi.
A decline by the dollar against China’s renminbi would help the U.S. economy, Soros says.
“It would help by making U.S. exports more competitive to China, but also would help to introduce an element of inflation in the U.S. In the current circumstances that would be very helpful.”
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