Dolla coming back up

**Chaigidel** · May 14, 2008, 03:17 PM

US dollar may be performing better in the coming months but sadly along with an overall world downturn in growth.

I for one am as pleased as can be that we arent consistently tumbling and that there are some signs of recovery

http://www.marketthoughts.com/z20050501.html

basically dollar coming up , economy going down more.

Im pretty sure the euro will remain strong.

subtext

americans has the loss in value of the dollar been noticable in your life? it certainly has been in mine, If any economists could explain if this article is wrong I welcome your advice, and in addition do you see any evidence of the dollar getting back some strength?

**Holger Danske** · May 15, 2008, 06:32 AM

Perhaps it's time for us Euro's to buy a lot of dollars, while they're still relatively cheap to get?

**Chaigidel** · May 15, 2008, 07:19 AM

could be, euro has a lot of buying power right now-- I would at least reccommend not holding off on those american products.

**Erik** · May 15, 2008, 01:22 PM

The writer of the article makes one (rather big IMO) assumption: that the dollar will remain the world's trading currency for the years to come.
In other words: that the system of the past decades will stay in place and that the recent "sub-prime crisis" was just a bump along the way and everything will return to "normal" soon.

This might be the case, but I'm fairly convince that the system of the past decades will change radically and the world will get off the "dollar standard".
Not because of the sub-prime crisis, of course, but because of America's huge foreign debt and their inability (or rather: total unwillingness) to pay it back.
To me the sub-prime crisis is just a tiny taste of a much bigger correction that is going to come.

In short: it's not in America' best interest to keep the dollar high, because of two reasons:
1) the higher the dollar the higher America's debts.
2) the lower the dollar, the better it is for American export and thus the US economy.

Why would America kill their own economy and bring themselves to near bankruptcy? to do some rich Chinese investors a favor?
Nah, America will do what's best for America: and that's letting the money presses run like they've never run before.

**Hunter Makoy** · May 15, 2008, 01:43 PM

that is a big assumption made by that guy. but the USD will still be the most commonly traded currency i believe.

Considering the most of the EU countries have a much higher Debt:GDP ratio then the US does, our foreign debt shouldn't have much affect on switching between Euro and USD. most of that will just be based on which is stronger and more stable.

it is correct that the lower USD helps US exports, that is y China always keeps the USD propped up, they want us importing from them, they want to keep us as an importing nation.

While a rising USD could cause global markets to come down a bit, it will be more of a short balancing act type thing that will happen automatically because of the changes in value. i dont think it would be anything that would last for long, as far as being caused by a rising USD. a global downturn could continue, but it would have to rely on other factors.

has the dollar greatly reduced in value in my life? generally speaking, not too much. most prices have remained generally the same. inflation is unavoidable, and prices will always continue to rise in the future. but cost of living and earnings in general have remained relatively even, if not earnings increasing in regards to COL.

**Pontifex Maximus** · May 15, 2008, 02:23 PM

I haven't been out of the country for two years, and even then it was to Mexico, where the Dollar is looking good. The rise of the dollar doesn't suprise me, things like this are constantly in fluctuation. Doesn't mean we will pass the euro. Regardless, the dollar is one of the strongest currencies in the world and I'm not that worried. I want be going to Europe any time soon however.

**Hunter Makoy** · May 15, 2008, 03:35 PM

right i dont think it will pass the euro, but it also doesn't have to. the USD is 100x more then the yen, but the yen is still a very good currency. its not the value between them, its how it fluxuates in relationship between the euro and the USD. if the USD could get up to about .70 euro, and stay there, it would be very nice.

**ZaPPPa** · May 15, 2008, 03:59 PM

Fluctuations are one part. However, A 1000 X = 1 Y does not mean anything if you don't know how much the median income is. If people in country Y only make one Y per month and people in country X make 100,000 X, country X's currency is stronger.

The dollar is being actively kept from dropping by the European Union and other entities. A fast-falling currency is bad for everyone. This small bump does not mean the American economy is getting stronger. It means some of the actions are helping.

**Hunter Makoy** · May 15, 2008, 04:16 PM

Originally Posted by ZaPPPa

Fluctuations are one part. However, A 1000 X = 1 Y does not mean anything if you don't know how much the median income is. If people in country Y only make one Y per month and people in country X make 100,000 X, country X's currency is stronger.

The dollar is being actively kept from dropping by the European Union and other entities. A fast-falling currency is bad for everyone. This small bump does not mean the American economy is getting stronger. It means some of the actions are helping.

the first part is very true, which is y the USD is still very strong against the Euro on purchasing power. The second part tho, y so quick to except the US economy to not be getting stronger? it has already been getting stronger for the last couple of weeks. Plus a nice almost 100 pt rally by DOW today as the oil prices drop.

Since this time in March the Dow has gained back over 1000 points. and Nasdaq has made up around 12%, and since April 21 the USD has already made up half of wat it lost from January. If our economy continues to turn around as the USD rises, then any negative effects it has on the global market hopefully wont last long. the US market is big enough that it can tend to pull other markets along with it, so long as China or Japan doesn't have a big downturn suddenly.

I certainly wouldn't bet against turning in some Euros for USD right now. the positive trend has already lasted almost a month for the dollar, so it should continue on for a while. good thing about that investment is the instant liquidity of it. just keep an eye on the markets.

**Chaigidel** · May 15, 2008, 04:00 PM

the overall forcast was for a continuation of the decline in all markets-- but the dollar gaining some value back.

**Erik** · May 15, 2008, 04:18 PM

Originally Posted by Chaigidel

the overall forcast was for a continuation of the decline in all markets-- but the dollar gaining some value back.

These things always go with ups and downs, I don't think anyone expected the dollar to drop every single day for years and years.

The only important thing is the trend, which I believe is still downwards.

**Hunter Makoy** · May 15, 2008, 04:34 PM

wats the trend for the EU eco? i cant find anything on that so far.

**Erik** · May 15, 2008, 04:44 PM

Originally Posted by Hunter Makoy

wats the trend for the EU eco? i cant find anything on that so far.

You can't accurately measure economies, especially not on a daily basis necessary to recognize clear trends.
Economies are not like stocks or exchange rates.

**Hunter Makoy** · May 15, 2008, 04:49 PM

i'm talking about the trend of the stocks. not about the growth output levels.

**Erik** · May 15, 2008, 05:15 PM

Originally Posted by Hunter Makoy

i'm talking about the trend of the stocks. not about the growth output levels.

OK, but just know that stocks have absolutely nothing to do with the economy.

I don't know about each and every European index, but I know the Dutch index is in an upward trend since march, heading towards the previous high of december/early january.

**Hunter Makoy** · May 15, 2008, 05:54 PM

that trend looks to be very similar with the US trend, i dont know how close Dutch goes wth the rest of europe, but i would bet its the same picture.

individual stocks have nothing to do with the economy as a whole, but indexes and total markets of countries paint a pretty accurate picture of how the economy is doing in that country.

**ZaPPPa** · May 15, 2008, 06:57 PM

Well, the mortgage crisis is far from over and we haven't seen the end of rising oil prices yet. After Bush's little stunt in Israel today, I'm sure he spooked OPEC and oil will go up soon. In Europe the gas prices have always been at least twice as high as in the US. So if you add 50 cents to the gas prices because of higher crude oil prices, the US gets hit twice as hard.

The Fed has helped by slashing interest rates, but they cannot go much further. So, what you're seeing is the US economy being on life support. I don't expect any major improvements until after November when the new, and hopefully sane, president is elected.

**RusskiSoldat** · May 15, 2008, 07:47 PM

Why is a strong dollar good?
Our competitive exports are what's keeping this country afloat.

**Chaigidel** · May 15, 2008, 07:50 PM

A stronger dollar is good because it helps to mitigate the credit problems, peoples loans arent worth less than before if the dollar comes back up. thus banks more willing to loan ?