US dollar will stay on top

MORE CASH IN emerging economies and widening deficit in the United States economy could weaken the American dollar, but it will still remain the most dominant world currency.Dr Warren Jestin, senior vice-president and chief economist at Scotia Economics in Canada, provided this analysis yesterday at a breakfast business meeting hosted by Scotiabank at Hilton Barbados.“The American dollar is probably going to be pretty volatile as will the Euro. One of the key reasons is if [the head of the Chinese Central Bank] decides that the foreign exchange reserves should be used in a sovereign wealth fund as opposed to buying United States treasury bills and bonds, that’s going to have implications for somebody trying to get a mortgage in the United States and it is going to have implications for the American dollar itself,” he explained.“You will find more exchange rate and more bond yield volatility in the next five years than what we thought was normal before the recession began,” Jestin said.Yet he conceded: “I don’t see another currency on the horizon that is going to gallop forward and become the new world currency. An IMF [International Monetary Fund] or World Bank solution for a synthetic currency is not in my view going to emerge over time.  (SR)