According to reports carried by the Associated Press, Reuters and Bloomberg, Brazilian beauty and world’s richest model Gisele Bündchen had insisted she be paid in euros for representing products produced by Proctor & Gamble and Dolce & Gabbana.

Bündchen allegedly feared that the fall in the greenback, down in US trade-weighted terms to a record low, would eat into her not inconsiderable annual fees of US$33 million.

A denial was issued by Bündchen’s US agent and published in the New York Times but a story like that is going to have a run no matter who denies it. Double sexy looking model and the US dollar under attack. It would have the back bench on any newspaper in the world drooling. All you need is some way of working in the Royal family and you have a world beater of a story.

On a more serious note, it does highlight the massive problem of the weak US dollar. Far more serious than the rejection of the greenback by the glorious Gisele Bündchen is the attitude of the Chinese government.

Although it was more an individual view than stated government policy, when the People’s Bank of China vice-director Xu Jian declared the dollar was ‘losing its status as the world currency’ it was serious news.

As China is sitting on the world’s largest foreign-exchange reserves — $US1.4 trillion, most of it denominated in US securities — its views hold immense sway.

A switch by China and other countries carrying US dollar reserves would lead to a boom in the euro and the yen and serious damage to the dollar.

Economist and market strategist Marc Faber believes such a scenario is already unfolding and referred to what he saw as the terminal decline of the US dollar.

There could be benefits to the United States. As the US is a big exporter of commodities exports could rise. But this is far from a sure bet.

All this from an excellent article by Richard Inder who is an investment advisor at Macquarie Private Wealth. Click on source to read the full article.
Source: National Business Review