The first quarter of 2009 has presented the markets with a clutch of problems, all vying to be considered 'the most serious'. Of these, two near-term issues that have enlivened even the most experienced currency strategists are the crisis-hit Japanese economy and the perilous outlook for the Eurozone.

Faced with such a combination of crises, and market volatility at unprecedented levels, it is not surprising that investors have headed for a comparatively safe haven, which is the US dollar. Simon Derrick, managing director of Treasury Management Services at BNY Mellon, says that despite the chaos in the FX markets, investors have in fact behaved in a rational manner, seeking out stores of value for their savings.

Such have been the flows out of global equities, corporate bonds and other assets that the dollar has strengthened against almost all currencies. "The dominant theme of the quarter is the strengthening dollar," says...