Magazine article Global Finance

Safety Catch

Magazine article Global Finance

Safety Catch

Article excerpt

The two most powerful forces in modern capitalism are, arguably, greed and fear. At present, fear is undeniably more prevalent, a fact that has sharply increased investors' concern for the safety of their assets. In their ceaseless search for safety, those investors have thrown up some curious anomalies over the past few months. Not least among those is the dollar's astounding ability to cling to its safe-haven status even as the country's central bank rolls the printing presses.

But safety is not what it used to be. Aided by technology, financial markets have become so liquid that enormous amounts of money can slosh, literally in the blink of an eye, from one side of the world to the other. The Swiss franc, for example, long considered among the safest of safe havens, plunged in value against the euro after Switzerland's central banker Jean-Pierre Roth announced that the bank would be selling francs (see Newsmakers, page 6). Admittedly, Roth was hoping to massage down the value of the currency, but the abruptness of the franc's fall might have caught even him by surprise.

With the franc losing its luster and the dollar looking decidedly toppy, investors have cast their net wider in search of the perfect safe haven. As Global Finance was going to press, it appeared that many of them had concluded that the Norwegian krone was the answer. Not only, the argument goes, is the krone undervalued as a result of the beating it took while oil prices tumbled from record highs last year, it is also backed by one of the world's most stable economies. …

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