A run on the U.S. dollar that would see investors rushing to dump the currency is a possibility, although it's difficult to judge how likely an outcome that is, the International Monetary Fund's chief economist said Monday.
With the U.S. current account deficit running at close to 7% of gross domestic product, economists have long expected the dollar to depreciate against other major currencies, and feared the dollar could go into free fall if that prompted international central banks and investors to flee the greenback.
"We are in a risky situation," said Rajan. "You cannot discount a run on the dollar. But you cannot fully quantify that risk at the moment."
"The first action will come from foreign private investors, who have no motives other than returns," he said.
Read the Full Story by Andrew Peaple and Emily Barrett of Dow Jones Newswires here: Run on the U.S. Dollar
Learn more about the coming collapse of the U.S. Dollar by reading the first chapter of The Coming Collapse of the U.S. Dollar and How to Profit from it.