James Surowiecki writes on the decline of the US dollar against foreign currencies in: In Yuan We Trust, basically saying that while there's cause for worry, the impact of a collapse in the dollar or a hard landing for the US economy would be as devastating if not moreso for the holders of US debt (Japan and China being the top two) that it's in the debt holders best interest to prevent a hard landing or collapse.

In the past three years, the value of the dollar has fallen by more than fifty per cent against the euro and twenty-five per cent against the yen, and, a recent rally notwithstanding, most analysts say that the dollar is only going to get weaker in the months to come.

We don’t have enough money at home to pay for all this spending, so we borrow from foreigners to make up the difference. Because we keep piling on this foreign debt—more than three trillion dollars so far—and have no clear strategy for paying it back, people are made anxious about the United States economy; this anxiety encourages them to sell dollars, and that drives down the value of our currency.

The currency market is a great example of what George Soros calls “reflexivity”: people’s predictions about what will happen to the dollar end up having a major impact on what actually does happen to the dollar.