Asian savings that had supported a debt-funded spending spree by the United States for almost a decade are beginning to flow out of US dollar investments and into the euro.
Depending on how far and how fast that flow goes, the tide could have far-reaching consequences for the global investment landscape and see the euro displace the dollar as the global reserve currency - though opinions are divided on how the tug of war, under way between the two currencies, will play out.
Norman Villamin, head of research and strategy group investments for Citi Global Wealth Management, Asia-Pacific, has a cautious view on whether the euro will displace the dollar. 'I am not sure that displace is the right word,' Mr Villamin says.
'The US dollar will remain a very important currency. What does happen, though, is that countries must decide as they go forward where the investment opportunities are and how to better match up their trade patterns with their structural reserves.
'Because they now have a very large proportion of reserves in US dollars, on the margin what it will mean is ongoing diversification out of US dollars into other currencies.'
Barclays Capital's chief economist, emerging Asia, Peter Redward, is blunt with his assessment. 'The euro is emerging quite clearly as an alternative reserve currency. Fixed income euro assets are larger than US dollar fixed income assets and the US dollar has been engaged in a trend decline for effectively six years now, which has required it to be propped up by central banks with the result that the region has accumulated huge foreign exchange reserves,' he says.
