The £ is on the slide and some say it will be back to $1.75 or lower soon. What are the best dollar investments before it's too late? To throw a few in:

Panama
Belize
Florida
South Carolina
St Kitts (my personal favourite)

Any other suggestions?

Hi Huw

You might add Qatar - as a dollar linked country - whose main product is valued in dollars.

But, with the Fed cutting 75 basis points today - I don't know where the dollar is going.

Cheers
Neil

Hi Hugh

Any country, I suppose, that is effectively pegged, formally or informally, to the dollar - Hong Kong (rigidly), China (still, just, but loosely), Saudi Arabia (just), United Arab Emirates, Qatar, Bahrain and Oman, as I understand it.

Anywhere in the Caribbean.

Oh, and let's not forget the US!

Then again, a currency punt is always a hugely speculative - and a short term - punt, isn't it?

Aren't long term fundamentals a far better gauge than currency fluctuations - unless you subscribe to the view that the US dollar's reign as the most important reserve currency is over, of course.

I think it's total supremacy is over - its huge importance, no.

What does anyone else think?

Robin I totally agree that a currency punt alone is not a great strategy and that's not what I intended to say.

I happen to believe that the US economy is in much better shape than most in the LONG TERM and that ultimately the dollar is stronger than the pound. So for me, looking for dollar based investments where the other fundamentals are strong is a good option.

As for the total domination of the dollar? Well the really interesting question is what will replace it? The Euro? Not in my book. I think it's only a matter of time (and that could be 1, 5 or 25 years) before the Euro single currency falls apart as it stands currenly. In fact it could happen sooner as if we really do get an economic crisis then the "one size fits all" interest rate may fail completely and some countries may be forced to pull out. Effectively another UK ERM scenario.

No risk of such problems with the good old USD.

I hasten to add I'm not an economist so I'm not an expert.

Huw

Hi Huw

I tend to agree with you on the euro and that it has yet to withstand a serious test - Italy could well turn out to be its first. The problem is always going to be - as things stand - that there will always be one country that will need different fiscal policies to another.

Where I think the euro is very useful, though, is when you're looking at emerging CEE markets, because, membership or pegging or loose linking represents a huge amount of stability. Membership of the euro, even more.

But, while I totally agree that the greenback is far, far from finished as the reserve currency of first choice - I think it has already been weakened - you only have to look at the fact at how China has started to stick a sizeable chunk of it's $1 trillion in euros and other currencies. And what China does matters and others will follow. Maybe the renminbi will be the first reserve of the future - just as it's allowed to float freely, in fact.

I also think that if we are optimistic and assume any US recession will be short and not too severe, we are still going to see a weaker dollar for a long time because the US needs one to get that huge trade deficit down.

So, I reckon a weak dollar, for sure - but a weaker pound to stay as well, because the UK has the same problems as the US. The euro will follow a little further down the track.

But, like you, I'm no economist. Which might even count in our favour!

cheers

Yep, I agree. Euro entry next Jan is another good reason Slovakia's one of the best bets.
Huw

Hi Huw

Here's one if you are quick - Qatar may abandon its currency peg to the US Dollar because it has an inflation problem and it needs higher interest rates not lower ones - according to the FT today.

If you believe that higher interest rates will attract capital to the currency which offers higher yields - then you might see a rapid appreciation in the Qatar currency.

So, buy property for Dollars now - and sell in the future for a new Qatari currency.

May be we will see more high growth / revenue rich countries leave the haven of the US Dollar - and I guess that anyone of those could offer an opportunity.

Cheers
Neil