Wednesday, September 9, 2009

After BRIC, Now UN Calls for New World Currency

The major problem that is happening with the world currencies keeps being raised by the emerging nations. The USD, the current world reserve currency, is broken. The U.S. will never repay its debt unless the currency is devalued. Such devaluation will cause major problems for all economies and is cause for concerns and headaches by many nations (not to mention poor investors who leave their savings in money market funds).

On the weekend, the United Nations issued a statement calling for the dollar’s role in international trade to be reduced by establishing a new currency to "protect emerging markets from the confidence game of financial speculation."

"UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members", says a report by the UN Conference on Trade and Development.

As reported earlier in the eyar, China, India, Brazil and Russia called for a replacement to the dollar as the main reserve currency. China, the world’s largest holder of dollar reserves, also said a supranational currency may add stability. Brazil and China have moved to use their own currencies in their tarde (China is now Brazil's main export market, ahead of ths U.S.).

As for the USD, here is the updated 6-month chart of the Brazilian Real vs USD, represented by the BZF ETF:

Today 1 USD buys 1.82 Reais, where it used to buy 3 Reais not that long ago:

Stumble Upon Toolbar

No comments:

Financial TV

Blog Archive

// adding Google analytics