Why US $ is going down: Central Banks buying Euros

The US dollar is having a hard time lately as its value continues to decline. One of the reasons is that foreign central banks are starting to diversify their holdings away from the US $ and toward the Euro. Remember the US government finances the deficit buy selling debt (US BONDS) and that the majority of the US Bonds are bought by foreign governments. This is because the US is viewed as a safe investment. However oil producing countries that are not exactly happy with the US are pushing hard to make the Euro the standard and not the US $.

Below is excerpt from news today
Reports that the United Arab Emirates would diversify its foreign currency reserves by purchasing more euros provided the currency-moving catalyst. Traders viewed the move as symptomatic of a wider trend and quickly bid up the euro.

"By itself, the UAE's shift is small change in the foreign-exchange market," Tony Crescenzi, chief bond market strategist at Miller Tabak and a RealMoney.com contributor, wrote in a published article. But "the UAE's shift is another in a string of actions taken by the world's central banks" to diversify away from the dollar.

source: the street.com http://www.thestreet.com/_iwon/markets/metals/10329783.html?cf=WSIWON1111051500