LONDON -- Global currency traders have begun to unload U.S. dollar-denominated assets as the benchmark currency slumps further and further.
China, which holds $515 billion of the U.S. budget deficit, was said to be selling dollars and buying Asian currencies to unhing the Renbi's dollar peg to a basket arrangement, something Chinese officials have increasingly hinted at, the Financial Times reported Monday.
Such selling could push the dollar, already at an all-time low against the euro and at a nine-year low in trade-weighted terms, sharply lower and Treasury yields markedly higher. That, in a worst case scenario, could boost U.S. interest rates and kill the current recovery.
Russia and India also have reportedly been selling U.S. assets, as have been petrodollar-rich Middle Eastern investors.
Part of the trigger for the selling came Friday when the greenback fell in spite of bullish data showing the U.S. economy created 337,000 jobs in October.
"If this can't cause the dollar to strengthen you have to tell me what will. This is a big green light to sell the dollar," said David Bloom, currency analyst at HSBC.
