Where do you (personally ) think it will stabilise against Euro ?? and by when ??
Indian
It will do so when America changes its current policies and starts to reduce the deficit.
The Canadian dollar is now $1.02 US, down from its peak of $1.10 a week ago Wednesday. (Yeah, things are bouncing around a bit.) So that may not be the best one to compare it with. But even so, there’s been a long-term increase in the Canadian dolar relative to the US dollar.
The euro has been rising more steadily relative to the US dollar; it’s now at $1.46 US. I think that this won’t change until the US starts to live within its means. No more deficit!
That would be nice, but you seem to think a declining dollar isn’t intentional. It is.
From what I understand about U.S economy, deficit is ballooning out of proportion. So" no more deficit "seems to me near impossible. Skidding USD can do it, but it also means a weak economy, which will impact global trade negatively.
Does anybody think USD will achieve it’s previous status ??
Well, the deficit isn’t actually “ballooning out of proportion.” It’s historically pretty normal for the U.S. and many other major nations. But it does increase interest rates, and our Fed allows more inflation compared to the European Central Bank. The Euro will probably continue to appreciate (against most world currencies) because it has very little inflation. This, of course, hinders growth, but c’est la vie.
Explain, please. (Haven’t been able to keep up with the new on the greenback.)
Hopefully not before I can buy a house in the US for the price of a pint of cider here.
Other people may think the trade and budget deficits are somehow normal. I’m here to tell you they are not. It’s Uncle Sam running up his credit card, and moreover spending more than he earns.
Look at trade: Myopic US consumers still want $40 DVD players which can only come from imports, and they still want to be paid healthy wages that dwarf the wages paid out in the export nations producing those DVD players.
What to do? Well, the path of least resistance is to allow the dollar to devaluate [more on how in a minute], effectively decreasing salaries without anyone (read: the voting base) really noticing while increasing import values and decreasing the value of our own exports overseas. This is not as good as tackling the underlying issues though, because US workers and Uncle Sam alike experience a decrease in net worth.
Look at the deficit: Uncle Sam is going to spend more than he earns. He can, for a while, because he’s got good credit. But credit doesn’t come for free. Honestly, Uncle Chan, Uncle Ito, Uncle Klaus, and others don’t really like Uncle Sam all that much and make sure they come out ahead in the deal. At first they hold IOU’s in the form of solid US dollars. But then they notice something Uncle Sam doesn’t seem to: how long will the dollar hold its value with Uncle Sam buying more than he sells and spending more than he earns? So they exchange dollars, fueling the decline, for other things belonging to Uncle Sam, like land and companies and other non-cash assets.
Uncle Sam does what he can with interest rates and whatnot to initiate a steady decline, because he has a trade and wage problem to deal with – and this way is easy. Uncle Chan, Uncle Ito, and Uncle Klaus help make sure that it happens, because they can’t trust the dollar, and probably envision the day when Uncle Sam will work for them.
I see. So how would this play out in the long term? Wouldn’t Americans have to give up their dreams of the $40 DVD player when $40 doesn’t mean anything to the Chinese exporters?
I know it is. Deficit spending, along with low interest rates pushes the dollar down. There positive aspects to a weak dollar. Not unlimited though, you can’t just keep pushing it down and it gets better and better.
Well, I guess a lot of long-planned dream vacations in Europe are off now.
Seriously I think it’s a bad thing. Being able to go to Paris, London or Rome almost came within reach of the average person for a couple of decades, at least given some planning and saving. Now the prices are off the charts if you want any better accommodation than camping in the woods.
It’s not good when the country you live in becomes the cheap shopping destination for all the other First World countries, or when most of the tourism is one way.
They’ll be giving up much more than that if someone doesn’t decide to try something different.
Suppose you want to spend more money this month than your income. This situation is called a “budget deficit”. So you borrow. The amount you borrowed (and now owe) is called your debt. You have to pay interest on your debt. If next month you don’t have enough money to cover your spending (another deficit), you must borrow some more, and you’ll still have to pay the interest on the loan. If you have a deficit every month, you keep borrowing and your debt grows. Soon the interest payment on your loan is bigger than any other item in your budget. Eventually, all you can do is pay the interest payment, and you don’t have any money left over for anything else. This situation is known as bankruptcy.
Each year since 1969, Congress has spent more money than its income. The Treasury Department has to borrow money to meet Congress’s appropriations. The total borrowed is more than $8,000,000,000,000 and growing. Even when government officials claim to have a surplus, they still spend more than they get in. We pay interest on that huge debt.
I don’t want these people handling my Social Security (which is another fund anyway), and could you imagine if they had anything to do with health care?
Health and Human Services is already neck and neck with military spending.
Oh…weak dollar? Tourism industry should be booming for the next few years. I made a fast deal to close on a couple of condos in areas where Canadians love to vacation in the U.S. I should have 2008 rented in full by March.
True, but this means that Americans will spend less abroad, keeping money here, and more foreigners will buy U.S. goods or visit, bringing money in. C’est la vie.
This paints a gloomy picture indeed. From what I read everyday, many american citizens do not seem to give a thought to an eventual disaster scene with USD.
Is it because they believe USD will bounce back, or they do not think that far ahead ??
Is there any good website where they analyse the future trends of currencies ?? I do read bloomberg and reuters , but am looking for something beyond that…
If you want to know about the decline in the value of the greenback, consider this
Tourists to the Taj Mahal can’t pay the entrance fee with dollars any more
Sure they come, but the dollar still skids. The usual corrective mechanisms of the market don’t seem to work.
Market correction works but it may take months, even years. The nature of the beast and there’s no getting around it.
I’ve never heard any competent economist claim that a stable currency slows growth. On the contrary, a high rate of inflation slows real growth in an economy and ends up with most people being worse off in the long run. (Yes, there are some winners who benefit from the market distortion).