TOKYO – It was Nixon-era Treasury Secretary John Connally who famously said the “dollar is our currency, but it’s your problem.” And doesn’t Asia know it 50 years on as the region witnesses the dollar skyrocketing in unexpected ways?
The US currency was supposed to be on life-support right about now. With inflation surging, Washington’s debt topping US$30 trillion, politics as polarized as ever and governments from China to Russia to Saudi Arabia searching for alternatives, it was almost certain to tank.
The opposite is happening as capital zooms out of the yuan and yen into greenbacks. This makes Connally’s 1971 maxim more relevant than ever. In fact, the gravitational pull toward the dollar now threatens to unnerve Asia’s biggest economies.
Over the last 25 years, episodes of dollar strength have often signaled trouble for Asia.