Dollar Decline Begins In Earnest as U.S. Deficits Climb

Friday, May 22, 2009 9:40 AM

By: Dan Weil

The dollar has likely begun its long term decline, say investment experts, who add that the risk to America’s investment grade rating could start a stampede away from greenback, devaluing the currency even faster.

The dollar’s recent bottom was on March 4, right around the time of the stock market low, when it hit $1.23 to the euro. It now trades at $1.38 to the euro. It recently peaked at $1.44 on Dec. 17 of last year.

In addition to huge deficits racked up by the Obama administration in the effort to jump start the economy, the global economy is bottoming, and that’s bad news for the dollar, says Thomas Harr, senior foreign exchange strategist for Standard Chartered Bank.

While that argument may seem counterintuitive, the end of the financial crisis means the end of investors’ need for dollars as a safe haven, Harr explained on CNBC.

“We think it’s clearly the beginning of a trend downward for the dollar,â€