Dollar Slide Continues

Currently US is the biggest exporter of inflation. Countries affected most are China & India. Both shining in BPO, IT & low cost manufacturing domains. Their phenomenal growth is partly due to the substantial low wage labor & high talent pool which attracts these countries as the ideal destination for moving businesses & doing business. As dollar drops they fear falling export & slowing economy. The low cost advantage is getting diluted. If you see from the US point of view it does want to see dollar falling gradually (though nobody is officially humming about it). That's why you don't see Federal Reserve intervening to control the dollar price. It increases US export & helps reduce its high trade deficit. It has its negatives of oil prices going high & in turn hurting the economy. But US knows that OPEC won't like to kill its golden goose & oil prices will have correction in the near term from its current high of $100/barrel. China & India are already making their efforts to control their currency valuations against US Dollar as they find no help from the US Fed. China's central bank, People's bank of China have already pumped in billions of Yuan in chines market to control the amount of the US Dollar in the market. Chinese have been on tight rope in balancing the currency valuation Vs the unwanted effect of rising inflation in the country. China's communist govt knows that growth is pivotal for the nation as any drop in growth would go against it & will have thousands of unemployed workers on the street. China has to maintain the min 8+% economic growth. So far China has been successfull as you can see china's currency to appraise against dollar by only 2% compared to Euro & Canadian dollar rise of more than 40% Take the case of India. Indian central bank, The Reserve Bank of India, has so far spent $3.5bn to control rupees strength against dollar, but still has not been able to control its rise. The rupee has gained almost 20% against US dollar. As an investor the what can we do to hedge against falling dollar? There are many options. Invest in gold (historically as US dollar goes down gold goes up, so true paper currency has no value compared to precious metal), Invest some percentage of your US Dollar savings in Australian or Euro currency. You can also invest in US funds with focus on overseas market as those funds will outperform the S&P and DJ Index, but in this case any gain in the portfolio will be eroded by the further fall in US dollar. Its a chicken & egg as long as you are fully invested in US Dollars. It would be interesting to see how far this slide goes.....