Friday, May 7, 2010

South Korean Won and the Brazilian Real as Reserve Currencies?

Of course, not.

But, it seems the world has changed a lot since 1997-98.
I quote:
A handful had comfortably outpaced the dollar this year before the latest market tremors had investors grasping for greenbacks. Two such currencies are the Australian dollar and the Canadian dollar. Both are issued by rich countries with stable banks that have not sullied the public finances. Another is the South Korean won. Brazil’s real may over time develop as a reliable store of value. The trouble is, securities issued in these currencies are a tiny fraction of those available in the world’s four main currencies, says Stephen Jen of BlueGold Capital, a hedge fund. The lack of scale and liquidity limits their role as reserve currencies. The dollar has those plainer qualities in abundance (Economist).
Interestingly, no mention of the Chinese Yuan.

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