Quite the recommendation from the World's largest bond fund.

stateside

http://www.bloomberg.com/apps/news?pid=20601087&sid=aeD0JMxdEA_c

Pimco Says Dollar to Fall as It Loses Reserve Status (Update1)

By Garfield Reynolds and Wes Goodman

Aug. 19 (Bloomberg) -- Pacific Investment Management Co., which runs the world’s biggest bond fund, said the dollar will probably fall as it loses its status as a reserve currency.

The dollar will especially drop against emerging-market counterparts, Curtis A. Mewbourne, a Pimco portfolio manager, wrote in a report on the company’s Web site. Investors should consider cutting their holdings of the U.S. currency, he said.

“While we have not yet reached the point where a new global reserve currency will arise, we are clearly seeing a loss of status for the U.S. dollar as a store of value even in the absence of a single viable alternative,” Mewbourne wrote.

The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners including the euro and yen, fell about 3 percent this year.

Pimco, based in Newport Beach, California, is a unit of Munich-based insurer Allianz SE.

To contact the reporters on this story: Garfield Reynolds in Sydney at greynolds1@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net.

Last Updated: August 18, 2009 20:19 EDT