The dollar's nominal effective exchange rate fell by 0

It is a small sentence, big echo, which has hardly gone unnoticed on the markets. Zhou Xiaochuan, the Governor of the powerful Central Bank of China, denounced, Monday 23 March, the importance of the dollar in finance and nothing less proposed that to replace it with a new global reserve controlled by the international monetary fund currency. Unsurprisingly, this proposal not sparked enthusiasm outside the United States, which firmly responded, through the Secretary of the Treasury, that they would oppose such a decision, called also "curious." Another sacrilege, the same day that the Chinese statement, the Viet Nam announced his decision to expand to 5 margin of fluctuation of its currency against the greenback. The latter, which ended the week on the rise, but retreated on that day against the euro, which rose from 1,3580 to 1,3630 dollar.

Prospects for diversification

Little surprise Central Bank a Gulf study explored the effect of the communication, Kuwait...) on the major currencies as the dollar, the yen or the euro (). Marcel Fratzscher and Arnaud Mehl were collected and studied the remarks and insinuations, sometimes disparaging and disrespectful, against the dollar. Indeed, the countries studied have mostly linked in a manner more or less fixed to the greenback exchange rate and their reserves are quite clearly invested in assets denominated in dollars. Also, their statements suggesting that they wish to diversify their reserves or weaken the link their currency to the greenback translates on average daily gain against the dollar of 0.25 for the euro and 0.15 for the yen over the period 2000-2007. The dollar's nominal effective exchange rate fell by 0.11 on average. Prospects for the euro that would benefit the most of it is euro

The effects of these statements on the euro and the yen are on a scale comparable to the impact of the statements made by the European officials or Japanese on their own currency, which proves the rise of emerging on the international stage and their growing influence on the markets. Indeed, if it combines the effects of all their statements during the year (2006) where they were the most numerous, the euro has appreciated by 7 against the dollar. That year, the progress of the European currency against the greenback was 10.

Search for benchmarks

Prior to 2003, little studied countries were verbally demonstrating their desire to diversify their reserves out the dollar or to release the link their currency to the greenback. Their statements have intensified as the dollar began its decline, reaching a peak in 2006. Then, they declined sharply (see chart). Communication has become more cautious and less frequent in 2007, and its effects on large weaker currencies, with still a 4 annual cumulative effect. The declarations of these countries have no more impact on major currencies (euro, yen, dollar) both during periods of high and low volatility on foreign exchange. On the other hand, they have a stronger impact when currencies are evolving away from their historical tendency of long term (5 years) and the market, saddens, is for landmarks.

China accounts for only three quarters of the statements made by the countries studied on the link of their currency to the dollar and the countries of the Gulf 20. All countries combined, the two-thirds of the releases have a neutral tone and a quarter send the message to the markets that the reference to the dollar should be relaxed to allow their currencies to appreciate, as when China passed a fixed relationship of the yuan to the dollar to a more flexible approach. The foreign exchange market also more responds to the statements made by the Chinese authorities on their motto and its relationship to the dollar as on its foreign exchange reserves. On this last Gulf, a statement on five originates other Asian countries. Two thirds of all of these communications imply that these countries are looking for diversification of their reserves, with less weight given to the greenback. A communication which became more intense after 2004, which marked the beginning of a rise of their assets, thus requiring much greater attention to their composition and risks.