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Credit Squeeze's One Winner: The Dollar

Worldwide scramble for greenbacks reverses currency's slide

By Heather McPherson,  Newser User

Posted Aug 16, 2007 12:59 PM CDT
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(Newser) – After years of decline, the American dollar has reasserted itself in the face of the worldwide credit crunch. The dollar has rallied against the euro and the pound as banks and investors drop hazardous financial instruments and hold cash, Bloomberg reports, making the implication clear: For all its woes, the dollar remains the world's unrivaled reserve currency.

The dollar hit a seven-week high against the euro yesterday, and the climb is likely to continue; UBS has predicted that the euro will slip to $1.32 in the next three months. Banks paying back dollar-denominated mortgage securities are now finding themselves in competition with investment firms buying greenbacks in hopes of a further rise.

A money changer employee changes Euro and US Dollars on an exchange kiosk, in downtown Milan, Italy, July 5, 2005. The euro soared to a new high against the U.S. dollar on Tuesday July 10, 2007, reaching US$1.3696 in afternoon trading in Europe before falling back slightly. The...
A money changer employee changes Euro and US Dollars on an exchange kiosk, in downtown Milan, Italy, July 5, 2005. The euro soared to a new high against the U.S. dollar on Tuesday July 10, 2007, reaching...   (Associated Press)
Paying attention to detail
Paying attention to detail   ((c) Unhindered by Talent)
Traders gather at a post on the floor of the New York Stock Exchange Wednesday Aug. 15, 2007. Stocks wobbled Wednesday after briefly dipping below 13,000 as Wall Street kept a close eye on the Federal Reserve and how much more cash it might inject into the banking system....
Traders gather at a post on the floor of the New York Stock Exchange Wednesday Aug. 15, 2007. Stocks wobbled Wednesday after briefly dipping below 13,000 as Wall Street kept a close eye on the Federal...   (Associated Press)
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