Case ID: UV2553
Solution ID: 13723
Words: 1652
Price $ 45

Global Asset Allocation Whither the US Dollar

Case Analysis

One of the foremost reasons why dollar could lose its value as an international medium of exchange was the failure of the United State’s geopolitical policies. However, the recent history testified to the fact that no other currency, not even euro, is strong enough to replace dollar. Williams compared the worst case geopolitical scenarios and their impacts on the dollar’s dominance with the downfall of the pound as an aftermath of Suez Canal crisis. In that case, Britain became alone in its foreign policy objectives and resultantly, pound lost its worth. However, even though US took some of very unpopular decisions in the recent past, its currency was strong enough to sustain the impact of these decisions.

Excel Calculations

Questions Covered

1.  Critique the author’s perspective on the U.S. dollar. o Describe three of the most powerful arguments towards a stronger/weaker dollar. o Do you agree with the author’s prospects for a stronger U.S. dollar?

2.  Currencies trade in pairs. Dollar/Euro. Dollar/Yen. Dollar/Renminbi. o Choose a pair and comment on which currency will likely be the stronger currency one year from now using some of the indicators described in the book as well as additional articles on the subject.

3. Should Rashonda Williams increase the allocation to foreign securities? Tie your decision back into your prediction for the dollar over the next 5-10 years.