John At The Center

For the past five years or so, the dollar has been the single largest funding currency in a global carry trade worth untold trillions of dollars. People borrowed and sold dollars, buying all manner of other currencies, from the British pound to the Brazilian real. Now that carry trade is being brutally unwound, and the world’s currencies are snapping back to a much more natural level.

The go-to guy in the blogosphere when it comes to international capital flows is, always, Brad Setser:

This is much more of an unwinding of carry trades than a flight to quality

http://www.portfolio.com/views/blogs/market-movers/2008/10/29/the-dollars-not-that-strong