The Fed betrayed the dollar by cutting interest rates. European’s don’t seem to want to hold dollars any more. And now, even the oil producers seem to be having second thoughts about the dollar. This from Brad Setser’s blog…..

I would note one additional change: a likely shift in the currency composition of the portfolio of the world’s large oil exporters. Qatar (hat tip Macro man) recently indicated that it cut the dollar share of its investment authority’s portfolio to around 40% . Kuwait has also reduced the dollar share of its portfolio. Russia cut the dollar share of its reserves from around 70% to around 50%. Pretty soon the Saudis will be the only big oil exporter keeping the majority of their assets in dollars …

Ramin Toloui calculates that the oil exporters need to keep around 60% of their assets in dollars for a rise in oil prices to be dollar positive. They probably aren’t doing that. More spending and investment in the oil-exporting economies also isn’t a dollar positive: the dollar’s share of the oil-exporting economies financial portfolio certainly tops the United States share of their import portfolio.