A combination of negative real interest rates and an exploding budget deficit as the US government takes on the “bad” assets of the banking system looks awful for the dollar. If the worst has yet to happen, it is because the crisis-driven homing instinct of Americans has led to substantial repatriation of overseas investments.

There is nonetheless a groundswell of comment about the viability of a reserve currency attached to a broken financial system, a persistent current account deficit and a fiscal nightmare. With the euro taking a growing chunk of official reserves, and panic in the air, is dollar hegemony at an end?