The dollar could bring investors a nasty surprise
Virtually everyone thinks the greenback will weaken
Our currency, your problem. That is how John Connally, America’s Treasury secretary, described the dollar to European leaders in 1971. The phrasing was apt. His boss, Richard Nixon, had suspended the convertibility of the dollar into gold and demanded a change to the exchange-rate system established at Bretton Woods in 1944. Other countries were told to strengthen their currencies, or America would subject them to trade restrictions. Compliance followed in short order. By the end of the year, the Smithsonian Agreement had devalued the dollar by around a tenth against key foreign currencies.
This article appeared in the Finance & economics section of the print edition under the headline “Everyone’s problem”
Finance & economics January 14th 2023
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