Officials in China, Russia, India, and Brazil have criticized the dollar’s status as the world’s dominant reserve currency, but a prominent currency expert disagrees.
“The dollar’s reserve currency status is working very well,” Michael Woolfolk, senior currency strategist at Bank of New York Mellon, told Bloomberg.
“You don’t want to temper with something that is working well, that’s at the center of the financial system when you’re dealing with crisis.”
Worry has arisen in financial markets that the United States will let the dollar slide to pay off its exploding debt.
“That’s certainly one of the risks, if you’re from China, Russia, the others that hold very large U.S. reserves,” Woolfolk said.
“They’re concerned about the risk of inflation in the future, … that we might take a benign neglect toward the strong dollar policy.”
But he took these countries, known as the BRIC, to task for their own currency policies.
“They now view their reserves as national wealth,” he said. “The traditional role of reserve currencies has been to support their own currencies in times of crisis.”
The BRIC nations “are concerned about what currencies to hold (reserves) in,” Woolfolk said. “They should be concerned about how they spend this money.”
Many experts say it’s important to keep the dollar strong.
"The bottom line is that a weaker dollar is in nobody's interest," Neil Mackinnon, chief economist at ECU Group, a London currency hedge fund firm, told Reuters.
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