Dirkou From United States of America, joined Jun 2003, 571 posts, RR: 0 Posted (8 years 6 months 1 week 2 days 22 hours ago) and read 1941 times:
Question for the financial guys out here: why is the Euro rising against the USD for the last 7 years and when will this stop? It hurst me everyday seeing the Euro beating records. Will these currencies have the same value in the future? What about with a Dem government in the USA?
Try to get a currency adjustment factor worked into your compensation. I did the same when I lived in the States and my pay was based on Deutschmarks and the Dollar went up against the DM.
After all, no one takes $$$ for your food or rent, unless you work for the Government and have PX priviliges.
To get to the original question - the strenght of the currency has a lot to do with.psycjhology but basically it reflects the strenght of the conomy and the National debt. The United States imports too much and exports too little. If all the Dollars the US pays to Far Eastern countries would not be re invested in the United States (because of the rel,ative political stability) the outside value of the Dollar would even be worse.
If Japan, Taiwan, Korea and China would cash in all their bonds on the same day, we would have the biggest crash the world has ever seen. I am not going to say anything about the hopeless case of trying to establish democracy in that tribal country between the two rivers.
Aloges From Germany, joined Jan 2006, 9289 posts, RR: 38
Reply 6, posted (8 years 6 months 1 week 2 days 14 hours ago) and read 1842 times:
There's also the issue of monetary reserves. A couple of countries have immense reserves, and until a few years ago the US Dollar was the unchallenged number one reserve currency in the world. It still is number one, but once the Euro started gaining value instead of losing it, considerable parts of those reserves were switched to the Euro which helped make it even stronger.
Walk together, talk together all ye peoples of the earth. Then, and only then, shall ye have peace.
The respective values will be the same at one point, given that either the Euro takes a big dive, or the Dollar goes up, but that equal value will only be temporary, since currencies change in value all the time.
It's not just the Euro. In Sweden, where we have the Krona (SEK), years and years ago 1 USD used to be worth about 10 SEK, but nowadays it's around 7 SEK (and dipped down to 6.50 SEK at one point last year). The Euro has been pretty stable from a Swedish point of view, with 1 EUR costing slightly over 9 SEK.
Sure, we're concerned for our lives. Just not as concerned as saving 9 bucks on a roundtrip to Ft. Myers.
Pope From , joined Dec 1969, posts, RR:
Reply 8, posted (8 years 6 months 1 week 2 days 10 hours ago) and read 1799 times:
Quoting Dirkou (Thread starter): why is the Euro rising against the USD for the last 7 years and when will this stop?
Like most things involving economics, think about supply and demand. Right now the US has a huge trade deficit. That means that we are importing more than we are exporting. When we buy foreign goods, we typically pay for those goods in US dollars. That means that there are a lot of US$ heading out of the country.
Well a foreigner holding US$ has to decide what to do with those $. They can save them or they can spend them. If they spend them, they either have to convert them into local currency (which just results in the same total amount of US$ outside the country remaining constant) or they can use them to buy US$ goods and send them back to the US$ reducing the supply of US$ outside the US.
Interest rates also play a big role. US interest rates are relatively low while European rates are rising. Therefore, money will be attracted to Euro denominated investments. Lots of people want Euro's (high demand).
Obviously this is a very basic explanation that ignores a ton of factors but it's the basis for further analysis. A recent NYT Editorial goes into the situation a bit more:
Depends on its economic policy. If a Democratic administration decides to increase interest rates and reduce federal debt, you may see a slight increase in the dollar's value compared to that of the Euro.
But at the present time it looks like the main driving factor in the dollar's plunge is the US trade deficit, as PanHam has very well explained.
As a side note, the thread title is a bit misleading. The way you phrase it makes it look like a war between the two currencies.
Pope From , joined Dec 1969, posts, RR:
Reply 10, posted (8 years 6 months 1 week 1 day 23 hours ago) and read 1715 times:
Quoting WunalaYann (Reply 9): If a Democratic administration decides to increase interest rates and reduce federal debt, you may see a slight increase in the dollar's value compared to that of the Euro.
How does any administration decide to raise or lower interest rates? The FOMC of the Federal Reserve does that.