Dollar Beating All Assets in September Undermines S&P U.S. Debt Downgrade

After all the concern that the U.S. is debasing its currency, the dollar beat stocks, bonds and commodities for the first time since May as investors sought refuge from slowing growth and Europe’s sovereign-debt crisis, Bloomberg reports.

The U.S. currency rose 6 percent in September, according to IntercontinentalExchange Inc.’s Dollar Index, beating returns of 1.6 percent by Bank of America Merrill Lynch’s U.S. Treasury Master Index. The MSCI All-Country World Index of stocks in 45 countries lost 8.9 percent, the largest monthly drop since May 2010. Raw materials measured by the Standard & Poor’s GSCI Total Return Index of 24 commodities slid 12 percent.

Gains for the world’s reserve currency show investor confidence in the nation’s creditworthiness after Standard & Poor’s stripped the U.S. of its AAA rating two months ago. Even with Republican leaders in Congress joining critics of Federal Reserve stimulus measures, the currency bested all 16 of its most-traded counterparts in September for the first month in more than three years.
“In a time of crisis you want to be holding the most liquid currency out there,” Aroop Chatterjee, a currency strategist at Barclays Capital Inc. in New York, said in a telephone interview Sept. 27. “It waters down the argument for ‘the end of the dollar as a reserve currency….’”

Read more at http://www.bloomberg.com/news/2011-10-02/dollar-beating-all-assets-in-september-undermines-s-p-downgrade.html