Tuesday, July 26, 2011

UBS: about the potential reduction of US debt

Analysts at UBS think that the United States may lose its top AAA credit rating in August if the White house and Congress agree to limited reductions of the budget deficit, while Standard & Poor’s and Moody’s Investors Service insist that $3-$4 trillion cuts are necessary.

According to the bank, the downgrade will certainly affect the prestige of America, but the impact on the greenback probably won’t be very significant as the central banks won’t sell Treasuries as they have to hold foreign-exchange reserves in liquid assets.

John Taylor, the head of the world’s largest currency hedge fund, believes that dollar won’t lose its dominance even in case of the nation’s downgrade. 

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