:eek: The exchange rate today seems to be one British pound = $1.75. And one euro = $1.23. This is not good for someone going from the U. S. to the UK or parts of Europe. Why is the dollar so weak now?
many reasons… i’m no expert, but here’s a couple for starters.
U.S. trade deficit. The U.S. imports a lot more than it exports. This means that there are more dollars buying euro products than the other way around. This demand for euros drives its value up.
America has had a large trade deficit for years, but the dollar has been propped up by foreign investors buying dollar denominated shares or bonds… however this is drying up a bit. Why? not too sure, concerns about the strength of the us economy, concerns about the strength of the dollar maybe. Its kind of a self-fulfilling prophecy. Investors get concerned about the value of the dollar, so they sell their dollar denominated assets (shares, bonds etc) and thereby contribute to the fall of the dollar.
Also, american interest rates are very low. not much temptation to buy dollars for deposit rates… However, analysts cited the euro areas high interest rates as a reason for its fall a couple of years ago, saying that it would stifle growth. A case of, put three economists in a room, and you get four opinions.
It’s because of the damn fool war. Ask Cecil. 
This staff report from Sept. should help:
There are some other factors that have contributed to the dollar’s slide. In brief:
Twin Deficits
In addition to the trade deficit mentioned above, the massive current account deficit (a virtually insatiable demand for funding) is of significant concern to the international investment community.
Interest Rate Differentials
In a bid to stimulate the US economy the Federal Reserve has slashed interest rates relative to other countries. Add to this that in a climate of dwindling yields in financial markets foreign exchange has seen a growth of interest as an ‘asset class’. The flood of money into the FX markets and the corresponding search for returns has seen great demand for ‘high-yielding’ currencies that have higher base interest rates (such as CAD, AUD, NZD, GBP, etc.) and a move away from those that have low interest rates (such as USD and JPY).
‘Strong Dollar Policy’
Although the Bush administration verbally maintains that it is committed to a strong dollar, the investment community recognise that this is unsupported rhetoric and that in fact the opinion at large is that this policy has been abandoned (only keeping up the pretense in order not to offend domestic industry).
The Euro as a potential reserve currency
While the greenback is still (and will be for some time) the global reserve currency, confidence in the European single currency is growing steadily and a number of nations (most notably the likes of China) have indicated that they intend to increase the proportion of FX reserves that they maintain in Euros.
Middle Eastern disinvestment
Middle Eastern investors who have traditionally held large amounts of US denominated assets have been getting out due to a combination of factors. This year has seen relentless selling of dollars from this sector.