Cold war of Currency.....A new dimension
 

[B]Cold war of currency
[/B]
There is a Currency Cold War being waged by Russia, Iran and various allies such as Venezuela.
Putin wants to force the use of euros as a reserve currency instead of dollars for oil and other transactions, then eventually the ruble. This is simply a monetary version of the old Cold War, minus the missiles.

[B]What is happening with dollar?
[/B]
The strategy is working in conjunction with the fact that the dollar weakens due to high debts, large military budgets and growing trade deficits. And as the dollar falls, not only do other currencies rise in value but the value of “real” things increases too such as oil (now at US$83 a barrel, gold, copper, lead, steel).

[B]What would be the consequences?
[/B]
A continuing drop in the U.S. dollar will have a number of interesting consequences:
-- Commodity prices will keep increasing, particularly gold as it’s a currency substitute to many.
-- China and other trading partners long on U.S. dollars, and under attack by protectionists in the U.S., will have increasing leverage over Congress.
-- Europeans will find their currency puts them into an uncompetitive position.
-- Europeans will find that Russia will try to scupper attempts to diversify energy supplies. Russia’s deal with Iran eliminates competition.
-- The Americans may end up with surplus dollars, no longer needed for reserves-currency transactions, which will force repatriation and inflation in their economy.
-- This is bad for Canada because what’s bad for America is bad for Canada.


Read more: [url]http://network.nationalpost.com/np/blogs/francis/pages/putin-s-new-currency-cold-war.aspx#ixzz12QBqGYiZ[/url]

@implication
 

I want to know the implecation of weak dollar on the economy of Pakistan? And what options do we have?

well simplistic view of the implication would be like this:

COnsider you have a bank account having 10,000 US dollars, if the dollar value will be affected the foreign currency and the power of dollar imperialism would reduce, so the same effect would be for the states who have their capital in terms of US dollar,

For pakistan, we are not the state having options in considerations. We will just act accordingly.