bored
The Aussie dollar was pegged to the USD in the early 80’s when it was worth US$1.30. It wasn’t completely floated until about 1986 if I recall. There were two revaluations of the AUD each down by about US$0.10 prior to floating. After it was floated it quickly lost another 10-15% of its value. Most currencies were still pegged to the USD well into the first half of the same decade. The difference between then and now is that back then governments through their central banks set the exchange rates. Today the markets determine exchange rates.
You won’t get an argument from me that the importance of the USD as the world reserve will slowly diminish with time. Just like when the GBP was the world reserve, it didn’t change to the USD overnight and it certainly didn’t spell disaster for the GBP. Just look at it today. It is one of the world’s strongest currencies. The process took about 30 years and was only accelerated because of WW2. The fundamentals of the US economy are very similar to their European, Australian and New Zealand counterparts. All these countries spend more than they earn. My prediction is that while the US is now slowing down, the lowing of interest rates compounded by a low USD will see a marked pickup in the US economy late in 2008 early 2009, just as the rest of the world is slowing down because of rising interest rates and overheated economies. Capital will then flow back into USD and JPY resulting in them rising in value.