Reserve Bank Governor Duvvuri Subbarao on Monday opined that there is no easy replacement for the American dollar as the global reserve currency.
"It is not easy to replace the US dollar as the global reserve currency because of the sheer size of the American economy and its dominant share in global trade", the Governor said at the launch of a book entitled 'Global Crisis, Recession and Uneven Recovery' by former RBI governor Yaga Venugopal Reddy on Monday evening.
Admitting that the emerging economies in particular and all those economies which have the American greenback as their reserve currency, are suffering from currency volatilities, he said, such a singular dependence on a single currency is creating many a vulnerability to these economies in particular and the global economy and its still fragile recovery in general.
The American unit has been steeply falling for quite some time now against all the major global currencies--the euro, pound and yen. Even the rupee has been steadily appreciating against the US unit for many a month, even though the euro and yen have gained much more than the rupee.
Since this September alone, the rupee has gained more than 5% against the dollar as the RBI has been keeping off the forex markets for the 18th month in a row. While this has helped importers, exporters, especially those from software side, have been hit badly because over two-thirds of their revenues come from the dollar-driven markets.