Fed Dudley's Comments On Dollar Could Be Good For Gold: Rickards
Tuesday May 10, 2016 14:40
(Kitco News) - Recent comments on reserve currencies from the Federal Reserves’ second in command may actually be good for gold, this according to best-selling author of Currency Wars Jim Rickards.
At a conference in Zurich, New York Fed President and Vice-Chair of the fed William Dudley said he doesn’t see the harm in giving new currencies reserve status. 
“I don't see this as a zero-sum game," he told the crowd. “If other countries' currencies emerge to gain stature as reserve currencies, it is not obvious to me that the United States loses," he said, as long as it "is being driven by their progress, rather than by the U.S. doing a poorer job."
Looking at his comments more closely, Rickards noted that if Dudley would want to make room for more reserve currencies, it would mean a decrease in the dollar’s share.
“That creates selling pressure on the dollar and tends to weaken the dollar,” he told Kitco News in an email response Tuesday.
A weaker dollar is consistent with the Shanghai Accord, Rickards continued, and will cause the U.S. to import inflation, which is what the Federal Reserve wants.
“So, Dudley's remarks are part of a weak dollar scenario, which is bullish for the dollar price of gold."
The International Monetary Fund’s basket of reserve currencies currently includes the U.S. dollar, the euro, the pound sterling, the Japanese yen, and most recently, the Chinese yuan.
"I believe that the most important goal must be to keep our own house in order," Dudley said at the event. "If we do this, then I expect that the U.S. dollar will earn the right to remain the most important reserve currency in the world."
By Sarah Benali of Kitco News; sbenali@kitco.com
Follow @SdBenali
 |
