After declining in value compared to other world currencies as the recession hit the dollars is making a comeback. It's good to see the value of U.S. currency rising again after the economic difficulties the the nation has been facing over the past few years. An article on Marketwatch.com opened with a statment on the subject, "The dollar rose to a five-week high against the yen and to a fresh nine-month high against the euro early in Asia on Friday, after the U.S. Federal Reserve raised its discount rate in a fresh sign the Fed thinks financial markets are gradually returning to normal."
Although these increases in the monetary value of the dollar are a good sign, as the Fed pointed out. There are other issues which must be taken care of to create a sustained rise in dollar. According to the article, "A sustained dollar rally may only come if jobs and other data improve, laying the groundwork for a hike to the Fed's key policy rate, traders said."
Do you think that continued growth of the dollar is likely at this time? Given Greece's current debt problems, how much of the dollar's rally against the Euro do you believe is attributable to actual improvement of economic policy vs. a decline in the value of the Euro because of Greek debt issues?
http://www.marketwatch.com/story/world-forex-dollar-surges-vs-yen-euro-on-fed-discount-rate-hike-2010-02-18
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I feel like this is a good indicator that our economy. The rise in the value of the dollar rising can only be a good thing for the U.S. economy. I think it will continue to rise as we rebound more and more and especially with the value of the euro likely to go down due to Greece's current condition i think that will only help the value of the dollar.
ReplyDeleteI agree with Josh that this is a good economic indicator. I wonder how low Europe is willing to let the Euro go until they do something significant to stop its deflation. While I don't think it's in risky territory right now, if Greece's situation were to only get worse or if other countries in the EU were to go bankrupt, I wonder if Europe would be more willing to cut them loose instead of trying to help build their economies back up and keep them in the union.
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Finally the U.S dollar is gaining its power back. This is a good sign especially for international trade. But I wonder if the EU will cut Greece loose at the expense of raising the euro. I think whatever Europe's decision on this matter will effect the rise in value of the U.S. dollar.
ReplyDeleteHooray! In a few years maybe it'll be worth it to import things again. A
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