Reports of impending disaster for the dollar have been, well, greatly exaggerated.
Remember last spring, when expert after expert was predicting terrible times ahead for the dollar? Blame the European crisis, or lingering U.S. economic doldrums, or whatever you want, but the dollar is on track to finish the year about 2% higher than when the year began. And the euro, which at one point seemed headed for 1.50 against the dollar, is down roughly 3% for the year.
The greenback is hardly the strongest major currency. Those honors go to the yen, which rose more than 5 percent against the dollar despite the best efforts of the Bank of Japan to stem its rise, and which ranks as the best G10 currency investment of 2011. And it's not like the dollar has suddenly become a favorite: much of its relative strength came from the simple fact that the euro has recently taken a pounding, and the buck could lose its advantage if Europe resolves its crisis or a U.S. economic recovery takes hold.
For this year, though, the dollar deriders have been dead wrong. Onward to 2012.
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