Weak Dollar Scaring Off Foreign Funds

US policy has big China, Gulf spenders looking to divest
By Nick McMaster,  Newser Staff
Posted Jul 17, 2008 4:18 PM CDT
One Gulf sovereign wealth fund has cut dollar-denominated holdings by 20% in the past year, the Financial Times reports.   (AP Photo)
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(Newser) – With the dollar declining and US economic outlook uncertain, some large sovereign wealth funds are looking to cut down on greenbacks, the Financial Times reports. One such Persian Gulf fund has cut its dollar-denominated investments from 80% to 60%, and China’s State Administration of Foreign Exchange is aggressively exploring European investments—a sign they don't trust US policy-makers to defend their currency.

The dollar still enjoys the full backing of the single largest sovereign fund: the Abu Dhabi Investment Authority, but there is grumbling: "We are suffering. We are importing inflation for no reason," one staffer says.