"A dollar rally agianst euros and pounds", is this a good or bad thing?
I’m doing a project for school and i was wondering if anybody could help explain this article
http://www.forbes.com/2010/01/04/yen-pound-euro-intelligent-investing-dollar.html
If you belive in Adam Smith free market system, it’s a good thing. The central banks in those countries have no power to influence the exchange rate directly.
It’s neither. What has been driving the dollar up and down over the last 18months is the waxing and waning of fear worldwide. The dollar is still perceived to be one of the safest places to be in a storm. When the storm clouds appear to be lifting and investors are willing to move to riskier investments, they will sell those "safe haven" dollars.
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If you belive in Adam Smith free market system, it’s a good thing. The central banks in those countries have no power to influence the exchange rate directly.
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It is a good thing if you want to buy more imports from a stronger dollar.It takes fewer to buy but in a debt based money system a lower dollar stimulates the USA export market at the price of a lower standard of living for the USA.This system of debt money is perverse.A gold or commodity based system of money a strong economy gives that country a hugh advantage as the USA position was from year 1935 forwards this is why since that time the USA economically became the strongest economy in the world and was able to have the USA dollar as an anchor(reserve status)that others used since 1935 to buy commodities with after converting their currency into dollars first to buy them on the exchanges.
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Bad as it indicates that the economies of UK and EU countries are weak.
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If you are an American citizen, you would not probably feel good about it because it simply indicates an unstable state of your economy. When this is the situation prevailing in your country, that would simply mean "other countries are about to take over your value/rate in the stock market".
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