Reports of death premature

For the foreseeable future, the U.S. dollar will remain the world’s most attractive investment currency. U.S. financial markets will continue to attract foreign capital since they are the largest and most liquid markets in the world. Over the past several years, U.S. economic growth has been much stronger than growth in Japan or the major European economies. Rising U.S. interest rates provide foreign investors with higher returns than can be obtained elsewhere.

The U.S. dollar should remain the global monetary standard for many years, reflecting the dominant strength of the innovative, U.S. economy as well as well-regulated, smooth-functioning financial markets that are significantly more efficient than capital markets prevailing in Europe or Asia. Net foreign purchases of U.S. securities in January were the second largest monthly total in history. From November 2004 to January 2005, net monthly foreign capital inflows averaged $77 billion, easily enough to cover monthly trade deficits averaging about $60 billion. Obviously the global investment community retains a solid appetite for dollar-denominated assets, which suggests dollar-crisis fears are exaggerated.