Over the past three years, financial turmoil in Asia, Russia, and Brazil encouraged foreign investors to shift large amounts of funds into the U.S., prompting a broad-based appreciation of the dollar. Now that financial calm has returned to emerging markets and foreign economic growth is quickening, some analysts maintain that the dollar will inevitably reverse direction. They contend that faster foreign economic growth will bring rising returns on investments abroad relative to those in the U.S. and an unavoidable diversification out of dollar-denominated assets.
Suggested citation: "The Dollar," Federal Reserve Bank of Cleveland, Economic Trends, no. 00-06, pp. 18, 06.01.2000.