Another reason is that US lives in an International war alone against the invisible, so it is normal for a country in war to loose stability in its currency . More over, inflation of not less than 17% the dollar suffers since long time. By the way one of the main reasons behind invading Iraq was to defend the dollar as Iraq transferred all its reserves from dollar to Euro !!
The invasion was a message to all Arab world to stay in dollar field .
We advise all world community to have diversity in their reserves as a precaution against mysterious destiny of the dollar.
Structural worries lead dollar down vs euro, yen
By Veronica Brown
LONDON (Reuters) - The dollar is on track to lose out against the yen and euro as investors increasingly move their focus away from the interest rate outlook and toward global economic imbalances.
A cloud has hung over the greenback this week since a statement from the Group of Seven industrialised nations pressuring China and other countries with big trade surpluses to let their currencies rise as a way of easing the imbalances.
Earlier on Thursday, China’s central bank surprised markets by raising its basic lending rate by 0.27 of a percentage point to 5.85 percent, prompting knee-jerk buying of the yen toward three-month highs against the dollar.
"With the rate hikes from Malaysia yesterday and China today ... and more flexibility in dollar/Asia, I think it’s quite a vulnerable time for the dollar in general," said Chris Turner, head of FX strategy at ING.
The yen quickly swung sharply away from its peaks after Japan’s top financial diplomat Hiroshi Watanabe said the G7 statement on global imbalances did not mean an adjustment in the dollar was needed.
Although the G7 stopped short of explicitly mentioning dollar depreciation, nothing has managed to pull it up for long -- leaving the greenback mired near seven-month lows against the euro and a three-month nadir versus the yen.
Analysts said the dollar’s backdrop was shifting definitively from a positive tone of rising interest rates to a focus on structural problems -- a negative for the greenback given the scale of the U.S. current account deficit which amounted to 6.4 percent of GDP in 2005.