The falling US dollar is giving ammunition to the critics of the Obama administration and fuelling broader concerns about the potential erosion of America’s reserve currency status.

Sarah Palin, the former vice-presidential Republican candidate, on Wednesday sought to link the dollar decline to rising US indebtedness and dependence on foreign oil. “We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar,” she wrote on her Facebook page.

With other nations also expressing concern about dollar weakness, the administration is at pains to emphasise that it understands the responsibilities that come with issuing the world’s reserve currency and will live up to them.

“It is very important to the United States that we continue to have a strong dollar,” Tim Geithner, Treasury secretary, said at the weekend. “We recognise that the dollar’s important role in the system conveys special burdens and responsibilities on us and we are going to do everything necessary to make sure we sustain confidence.”

Angst about the dollar – which has fallen 11.5 per cent on a trade-weighted basis over the past six months – extends beyond ideological conservative political circles.

Last week, Robert Zoellick, president of the World Bank, warned that “the United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency.”

Much of today’s debate echoes the traditional political response in the US whenever the currency depreciates. But it is now accompanied by warnings from America’s creditors, many of which are widely rumoured to be eyeing large purchases of US real assets such as property and companies.

“The dollar has always been a testosterone issue among America’s political classes,” said Norm Ornstein, a veteran analyst at the conservative American Enterprise Institute.