The dollar should continue its appreciation as investors flock to the United States, and that’s not necessarily good news, says Mansoor Mohi-uddin, managing director of foreign exchange strategy at UBS.
“Policymakers need to be aware of shifts in the greenback’s position in the currency markets,” he says.
“Just over a decade ago, dollar strength during the Internet bubble caused the yen to weaken sharply, leading to the Asia crisis of 1997-98. The rise of the greenback also led indirectly to the Russia crisis of 1998 and forced Brazil to devalue the real in 1999,” he wrote in the Financial Times.
Fortunately, at present, the dollar remains a bit undervalued against the euro, Mohi-uddin says. The euro recently hit a 10-month low of $1.3267.
Read More: – By Dan Weil, Moneynews