There were worries that the U.S. dollar might fall sharply, were it not for continued and heavy currency market interventions by Asian monetary authorities. That has not been the case so far. In the case of the yen, even in the absence of official interventions in the foreign exchange market since mid-March, the dollar has held up well against the yen.
Researchers have consistently found that, in general, investors direct too much of their savings domestically. Owing to risk aversion, they tend, to their own detriment, to over-discount foreign returns. Such suboptimal allocation of capital lowers living standards everywhere. In their seminal paper twenty years ago, Feldstein and Horioka pointed out that, on net, nations’ 5 savings are generally invested domestically.