Credit Writedowns Wed 2009-10-14 12:12 EDT

Currencies pegged to the dollar under pressure to drop peg

...as the dollar continues to weaken, those countries with pegs will be under pressure to drop their peg or to revalue their pegs higher. The Bloomberg video linked below explains. The dichotomy whereby the adjustment process is done only through free-floating currencies is inherently unstable -- and invites a nationalistic response. A busted peg in any major U.S. trading partner's currency is likely to have a very negative psychological impact on currency markets and severe knock-on effects... [dollar losing reserve status]

credit writedowns; currency pegs; Dollar; drop peg; pressures.