US central bank policies affecting global reserves

Updated: October 30, 2009

Monetary policies of various nations play a key role in influencing the worldwide economies and consequently the international financial markets. Current central bank policies are increasingly looking forward at diversification and are shifting their reserves that are weakening dollars in comparison to euros and yen.

The weak U.S. currency poses threat for the world strategists. Nevertheless, it supports the Obama administration efforts to boost up the exports, as commodities are less expensive beyond the national borders. This in turn will improve the national employment rate. On the other side of the coin, imports will be costlier for the consumers in U.S. economy. From asset manager's perspective, they might hold less of dollar assets. In addition, according to the trading model created by Barclays, there is an opportunity for investors to grow richer by following the central banks' moves and trade the dollar depending on shift in global reserves along with other economic variables.

Considering the economic cycle, dollar is under downward pressures that might continue beyond 2010. This downward trend in dollar might have disastrous implications on global financial markets and could squeeze U.S. economy if BRIC economies decide to desert it. However, the central bank policies to move away from dollars give the impression of being impermanent until the interest rates are lifted up from near zero. Imposing higher rates by the global bonds market on U.S. economy could only lead to interest rates boost in U.S. economy.

Featured Research
  • Why Your Educational Institution Needs to Implement VoIP

    VoIP makes a lot of sense for educational institutions—and it’s not just because of the substantial cost savings. Other benefits include increased efficiency and integration options. Emergency responsiveness can even be improved. more

  • Is Your ERP Solution Out of Date?

    Enterprise Resource Planning (ERP) is a modern, large-scale software program designed to help businesses improve the internal flow of important corporate processes and communication. more

  • How Video Conferencing is Transforming Healthcare

    The telemedicine revolution is finally happening. Experts have been discussing the potential for patients and healthcare providers to connect remotely for years, but the market is just now moving to adopt it—in a big way. Data suggests this market will grow over 14% annually through 2020! more

  • How to Update Your Contact Center Software

    If improving customer experience is important to you (it should be), then 2017 may be a good year to reevaluate the software you use for your contact center. With customer preferences shifting, the importance of an efficient contact center has never been higher. You cannot afford to simply focus on keeping costs low. Significant competitive advantages are available to businesses who manage this area effectively. more

  • Leading the IT Revolution

    The status of technology within an organization is rapidly evolving—and so is the role of the CIO. With breakthrough capabilities enabled by new technologies, a growing shortage of available developers, and an increasingly tech-savvy business user, the role of IT—and the CIO in particular—is morphing into one of strategic advisor to the business and driver of innovation within the company. more