I think the dollar has run its course with the euro, however i think it will still depreciate against other currencies like the yen, the aussie and canadian dollars.
i don't see it going substantially lower, the euro is not exactly a rock solid currency, the possibility is always there that some countries may pull out if unable to live with it. I think the dollar has run its course with the euro, however i think it will still depreciate against other currencies like the yen, the aussie and canadian dollars.
sign said:If the US dollar depreciates against the yen, the aussie and canadian dollars, but holds its value against the euro , does this mean the euro will also depreciate against yen, the aussie and canadian dollars ?
AFAIK, the ECB is not opposed to 1.50 or even 2 dollars to the Euro, so long as it happens gradually and without sharp hikes in either direction.
AFAIK, the ECB is not opposed to 1.50 or even 2 dollars to the Euro, so long as it happens gradually and without sharp hikes in either direction.
Trichet's on record as saying the rise of the euro vs dollar shouldn't be "brutal". But his point is: while the ECB will intervene to cause a partial rebound after the dollar falls five cents in a week, this is not expected to reverse or stop the inevitable decline in the dollar. Until the balance of payments starts to break even, the dollar's falling. The ECB's job is to keep the falls slow and measured so that businesses on both sides of the Atlantic can adapt to survive the change.
If I'm right, the ECB will make a few interventions, but ultimately will not expect to prevent the USD going to 2 per Euro while the twin deficits are in place.
http://www.dailywealth.com/archive/2007/jun/2007_jun_05.asp
Just read an article posted above, about the big problems for the spanish economy. Spain has the largest current account deficit in the world after the united states and this is in absolute not per capita terms. It is predicting a collapse on property prices there and a full blown recession. The reason for all this the euro and spains inability to live with it. The rising interest rates now after years of ultra low interest rates are crippling spain
... and this will cause the dollar to fall how much? ;-)
It'll fall continuously, but slowly, until the twin deficits are reversed. Broadly speaking, it's unlikely to ever fall much more than two cents per month on average in any given year, as the ECB and perhaps other players will intervene in the markets to strengthen the dollar if it falls more sharply.
But there is no floor to this. If the twin deficits continue until 2030, there could easily be 3 or 4 or 5 dollars to the euro.
There is a certain temptation for the US government for the dollar to continually weaken: it makes paying their domestic bills cheaper. US exporters have been doing well of late, and their unemployment has been worse.
True. Although it pushes up the price of their imports. However, their unemployment statistics are a joke. The secretive birth/death model employed by the BLS has more double counting and spurious assumptions than Dick Roche's voting register.
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