Bloomberg reports IMF Says Overvalued Dollar Used for ‘Carry Trades’ :
The International Monetary Fund said traders are probably using the dollar to fund “carry trades” across the world and the currency may still be overvalued even after its slide this year.
“There are indications that the U.S. dollar is now serving as the funding currency for carry trades,” the IMF said in a report published today. “These trades may be contributing to upward pressure on the euro and some emerging economy currencies.” While the dollar “has moved closer to medium-run equilibrium,” it is still “on the strong side.”
The IMF is also warning on the Chinese currency being significantly undervalued. We've covered China's currency manipulation many times and noted almost all of the U.S. trade deficit with China can be attributed to Chinese currency manipulation.
See this post for Roubini's warning on the dollar being used as the Mother of all Carry Trades.
Ok, after this massive dollar devaluation slide (13% this year), we're being told the dollar is still overvalued. Gold anyone?