Any Good News Now Will Kill the Dollar

Monday, March 16, 2009 3:45 PM

By: Dan Weil

The dollar has been a beneficiary of the financial crisis, with investors flocking to the greenback as a safe haven in this time of turmoil.

But many experts say this safe-haven effect will soon wear off. Then the dollar will begin it’s inevitable decline on the back of some much new cash from both zero interest rates and the Fed’s massive printing program, under way now.

The dollar has gained 23 percent against the euro since hitting a record low of 0.625 euro ($1.60 per euro) last July.

But Steven Englander, chief U.S. currency strategist for Barclays Capital, tells Bloomberg that he sees the dollar slipping back 13 percent in the next year.

He’s not alone. Half of 50 currency strategists surveyed by Bloomberg predict the dollar will fall against the euro by Dec. 31.

Englander says foreign purchases of American assets have risen to record highs. Individual investors have bought American to the tune of $133 billion per month on average since November.

“People are sitting there holding massive amounts of zero-yielding dollar assets,â€