The US dollar has been on a resurgent path since the fall of 2008 when the global financial crisis erupted in earnest.

But economists remain cautious about the upward trend of the greenback.

The dollar has risen sharply against other major currencies, especially the British pound and the Euro since the financial crisis, a move analysts attribute to risk aversion on the part of investors.

As the crisis roiled the global stock markets and heightened investment risks, investors bought huge amounts of US treasury bonds as a safe haven, which boosted demand for the dollar.

Jing Ulrich, managing director and chairperson of China equities for JP Morgan, confirmed that the dollar and the Japanese yen have become safe havens in the global currency markets.

"Investors have been buying the US dollar in large quantities in the past few months, which pushed up the greenback, especially against the British pound and the euro," she told Xinhua on Tuesday.

The dollar had fallen sharply against the British pound and the euro before the financial crisis as ballooning US trade and fiscal deficits undermined investor confidence.

The dollar dived as low as 0.4995 against the British pound on July 15, 2008. Since then, however, it rose steadily until reaching 0.7287 on March 10, a 45.9 percent increase in about eight months.

On Monday, the dollar traded at 0.6609 against the pound, still32.3 percent higher than its low point in 2008.

The dollar moved in similar patterns against the euro in the same period. It slumped to 0.6283 euro on July 14, 2008, before rising to 0.7996 euro on November 21, 2008. That was a 27.3 percent increase in about four months.

On Monday, the dollar was quoted at 0.1713 euro, still 17.1 percent higher than the low point in 2008.

However, strong doubts about the dollar's continued upward trend arose when the US Federal Reserve announced March 18 that it would buy US$300 billion worth of long-term treasury bonds over the next six months in order to try and get credit flowing more freely again.

Some economists say the Fed's decision to buy treasury bonds, a move aimed at lowering the long-term interest rate, has the risk of leading to higher inflation by significantly increasing currency supply.

The Fed is "essentially printing money" to buy the bonds and securities, rather than drawing on tax dollars, some experts say, arguing that the dollar will drop in the long term because of the inevitable inflation.

"Printing money will lead to inflation. As long as a country has higher inflation, its currency does have the possibility of depreciation against other currencies," Ulrich said.

The money-printing measure adopted by the Fed would definitely have an impact on inflation sooner or later, she said.

The Fed's decision came as it had already cut the key benchmark interest rate almost to zero, leaving no room for additional maneuvering.

The Fed had to "print money" to buy treasury bonds in the hopes of lowering long-term interest rates in order to push down mortgage rates and help the hard-hit housing industry, Ulrich said.

Even though the dollar is unlikely to depreciate very soon, it could lose value against other major currencies in one or two years' time, she said.

But because some European countries are "printing money," too, the dollar might not drop against those currencies, she said.

(Xinhua News Agency May 13, 2009)