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        As the global currency utilised for clearing residual payments in international trade, the US dollar has been playing a significant role in world transactions. With the rise of Euro, the question has been asked whether it would face any decline in its importance.

        The answer lies in the US trade deficit. Asia, Europe and Latin America feasted on this trade gap which resulted in the US deficit hitting the figure of $800 billion in 2006 while its cumulative total was $44.4 trillion.This is because of life- style compulsions rooted in ravenous consumption appetite. Japan invoices 52 per cent of its exports in dollars, Australia 68 per cent and South Korea 85 per cent, while France and Germany service a third of their exports in US dollars.

        Dollars represent two- thirds of official foreign exchange reserves worldwide. Dollar's role reflects its political stability, its large and wealthy economy and deep financial markets, plenty to buy and easy to sell.No wonder the dollar dominates in international bank loans and bonds and is favoured as a reliable store of money for those who wish to hold their wealth in stocks and bonds and bank deposits outside their own countries.Political leaders in compulsory or voluntary exile migrate to the US as the safe haven for themselves and their money. Of course, their country has to fight doggedly with the US to get back that wealth transferred illicitly. It should be noted that US deficits are not self- correcting. Surplus dollars from exports do not get dumped in foreign exchange markets which could lead to cheaper dollar and larger exports but are kept back by the holders.In fact, US export earnings are overbalanced by imports rendered costlier by cheaper dollar. Export earnings are kept away while a pinch is forced by imports. Hence, over the short and long terms, difficulties are inescapable.Private foreign investors put huge sums in US stocks, bonds, real estate and companies and in the big exchange reserves of the US Treasury. And countries like China keep their currencies depressed.

        Of late, the US witnesses a surge in consumption imports to the detriment of domestic producers. The loss of producers would sooner rather than later press the panic button when monetary experts assess the deficit as being too high to be safe.