The Source of the Dollar's Recent Strength

Why is the dollar strong?

Bank X, a foreign bank, takes $ deposits and invests proceeds in $ assets. Sadly, these turn out to be toxic. Bank X dumps the toxic assets, and takes the loss. What do they have to do to make the depositor whole?

BUY $

$ will gain against EUR and GBP, but not JPY.

Comments

[Pretzel Logic:]

My theory too. Nice simple explanation.

2008 Oct 03 06:48 AM

[NOWHEREMAN:]

Add redemptions to the mix, Hedge and Mutual. Everyone jumped into emerging markets, guess who's currencies are being sold and what currency is being bought?

2008 Oct 03 10:33 AM