Asia is the last bastion of the strong dollar policy. US policymakers still repeat the mantra of a strong currency. But it is Asia's central bankers that have backed up their words with action, accumulating thousands of billions' worth of US Treasuries.
The dollar remains the world's premier currency as a result. It still accounts for nearly two-thirds of all foreign reserves. Moreover, the recycling of excess savings globally into US capital markets enabled US consumers to buy imported goods and real estate far beyond their means during the great economic boom, and also enabled the US government to run immense fiscal deficits to offset the great economic bust.
But is the dollar's bastion about to wobble? China's policymakers are now questioning whether the country should continue keeping the lion's share of its $2,000bn dollar reserves in American assets. Zhou Xiaochuan, governor of the People's Bank of China, has even suggested that the dollar be replaced as the world's reserve currency by the IMF's Special Drawing Rights – a basket of currencies that consists of the dollar, euro, yen and sterling.