CD,
I'm not completely sure what that author could be talking about. The general meaning of "cash forex" is the spot forex market, in contrast to the futures exchange. The cash forex market is open 24/7 around the world, the market "moves" from country to country following the sunlight and anybody can trade it, whereas the futures market in a particular country is only open when their exchange is open and you can only trade it during those hours.
If the author means "spot forex" when he says "cash forex" then I can assure you he doesn't know what he's talking about, there is hardly any spread between the spot market and futures right now that I am aware of, and certainly not more than a few percentage point spread in any case. The spread between spot and futures is usually less than one tenth of one percent and as I understand it if the spread was any wider it would only last for a few moments until someone took advantage of the difference.
Alternatively, the author could mean something else by "cash forex", maybe he means the market for physical cash, and not the spot market. If that is the case then I have no idea, I know nothing about that except that there are very few places to get physical forex, so everyone has to order it when they need it, everyone except the biggest banks and airport forex exchanges. If the author means the physical cash market then he's talking about a paper commodity cash, and that would play by a whole different set of rules than the spot market, because with cash money you are talking about a physical thing that has a cost associated with it for transport (big truck, people with guns ..), storage (big heavy door w/ a wheel instead of a tiller), and everything else.
I would assume the physical cash market is a lot like the physical precious metals market meaning that there can be times when there is a premium over or under the spot price (late last year being a good example), and that has to do with the availability of the commodity and it does (in the pm market) forecast a change in prices. I do not, however, think that the physical cash market would forecast a price change for the spot forex market in the same way, because I would assume that if the price of physical cash was trading at a significant discount to the spot price it would be due to general decline in economic activity around the world, and people would be trying to drop the reserve currency (as a physical note) because they would still have to pay all those warehousing fees but they would not be generating as much profit on trades to cover them because the people who use physical forex cash (businesses and tourists) would not be doing as many transactions (due to less travel, etc).
That is the only way I would be able to explain a wide spread between a "cash market" and the rest of the forex market, I really don't know what the author is talking about to be honest. I cannot imagine there is a 38% discount on the $us in any market, however, because spreads like that don't last in any market because there are too many people who could take advantage of it through arbitrage. An example of how that works is last year in the physical PM market, when the spreads increased between physical gold and the spot price you had people who were willing to sell their physical gold and lock in a future price to replace the physical gold at a substantially reduced cost with essentially zero risk to them, and that activity eventually opened up the physical gold market by increasing inventories and availability. I would assume the same thing would happen with physical cash, except that it would be even easier because all you have to do is deliver the cash to the government that made it and have them convert it into electronic form for you thereby completely eliminating the spread, converting your physical cash into the electronic spot market.
As should be obvious, I'm not really sure what the author is trying to say.
Edit - but I do agree with the author's conclusion that eventually there will be devaluation!
