Fears of U.S. dollar on verge of collapse and loss of status as world reserve currency

The U.S. economy and its currency as an instrument of world trade has suffered a series of major setbacks in recent months and the Federal Reserve's attempts at damage control may be a case of "too little, too late" according to analysts around the world. Today, Saudi officials refused to cut interest rates in lockstep with the US Federal Reserve for the first time in decades. According to Ambrose Evans-Pritchard, International Business Editor for Telegraph.co.uk, "it's a signal that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East."

The Currency Chief at BNP Paribas, Hans Redeker also stated today that Saudi Arabia's move to not adjust their own interest rates in lock step with the Fed's cuts is a very dangerous situation for the dollar. On September 18, the Federal Reserve made a dramatic intervention in financial markets by cutting rates to 4.75% from 5.25%.

Mr. Redeker also said, "Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States."