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Sunday, February 06, 2005

More Bad News for the Dollar

According to the London Financial Times, Russia is abandoning efforts to tie the rouble exclusively to the dollar and is switching to shadowing the euro as well.

It's boiling down to a game of international currency chicken. None of the central banks who have large portions of their reserves in dollars want to trigger a devaluation, which would happen instantly if everyone started dumping it. But nobody wants to be the last one left holding the bag if it tanks, either.

First China, then Maylasia, now Russia. Things are getting a bit tense in the international finaicial community. And why can you only read about this in European financial papers? Well, that's a really good question.