Wednesday, March 27, 2013

Lower Dollar Will Be Driven By Market Forces

The trading and currency deals between the BRIC nations are dollar negative over the long-term.  The flight to the quality to the cleanest shirt in the dirty laundry hamper of fiat currency has been pushing the dollar higher since 2011, but the short-term eventually yields to market forces.  The key to investment success is recognition and timing of secular trend driving by market forces.

Chart:  U.S. Dollar Index

Headline: China, Brazil sign trade, currency deal before BRICS summit

(Reuters) - BRICS members China and Brazil agreed on Tuesday a swap line allowing them to trade the equivalent of up to $30 billion per year in their own currencies, moving to take almost half of their trade exchanges out of the U.S. dollar zone.

The agreement, due to last three years and signed hours before the start of a BRICS summit in Durban, South Africa, marked a step by the two largest economies of the emerging powers group to make real changes to global trade flows long dominated by the United States and Europe.



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