The Dollar Straining from the Financial Crisis

Matthieu BUISSIÈRE Directeur adjoint, Direction des études et des relations internationales et européennes (DERIE), Banque de France ; École d’économie de Paris. Contact : matthieu.bussiere@banque-france.fr

Magali GILLIOT Banque de France. Contact : magali.gilliot@banque-france.fr.

Vincent GROSSMANN-WIRTH Chef du pôle conjoncture et prévisions internationales, Service d’études macroéconomiques et de synthèses internationales (SEMSI), Direction des études et des relations internationales et européennes (DERIE), Banque de France. Contact : vincent.grossmann-wirth@banque-france.fr.

The widening US current account deficit in the 2000’s and the fact that the financial crisis started in the United-States suggested a further depreciation of the US currency. Seven years after the collapse of Lehman Brothers, the dollar has however reached a ten-year high in effective terms. While the most recent bout of appreciation is related to different positions in the business cycle, the overall strength of the dollar since the beginning of the financial crisis is also due to the safe haven status of the US currency. The dollar has indeed remained predominant in the international monetary system, as shown by the share of the dollar in foreign reserve holdings, international payments or debt issuance, in advanced countries as well as in emerging economies.