MFI News
Dollar Implications of Dubai Jitters
December 2, 2009 by admin · Leave a Comment
Thanksgiving eve, Dubai World, Dubai’s state-owned development company, rattled the world by releasing a statement that it seeks a moratorium on its debt and interest payments until May 2010. The credit crisis is not last year’s nightmare – it has merely entered a new phase. We look at the implications for the U.S. dollar.
On Thursday, with U.S. markets closed for Thanksgiving and Dubai closed for a religious holiday, stock markets around the world plunged, the dollar rallied. That was Thursday, but the rally did not last and the dollar has since struggled once again. Why would that be? Isn’t a crisis supposed to trigger risk aversion, a flight to quality, a flight to the U.S. dollar? Some have suggested that Dubai’s problems are not that large and that’s why the negative news is mostly limited to plunging stock markets in the region. We disagree on a couple of fronts. Read more about the U.S. Dollar…
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