U.S. Exchange Rate Confuses Me

[UTCVenturesLtd]

With the U.S. economy is such bad condition, why is their dollar gathering strength against ours

That makes it tougher to buy real estate down south. You would think that we should be back to par or better!

 

[MonteDobson]

Currency fluctuations is one of many risks of buying abroad.

The US economy and financial mess, taxes, and currency risks make it not all that attractive of an investment to currently buy property in the US.

 

[wealthyboomer]

QUOTE (UTCVenturesLtd @ Oct 8 2008, 07:54 PM) With the U.S. economy is such bad condition, why is their dollar gathering strength against ours

That makes it tougher to buy real estate down south. You would think that we should be back to par or better!

The answer, it seems, lies in broad-based global demand for long-term US government debt. When investors become spooked by risky market conditions (as would be reasonable given recent events), they move their capital from stocks and other higher-risk investments to long-term US Treasury bonds. While these offer very little return, they are considered nearly risk-free. The assumption is that such an investment can only go meaningfully awry if the government itself collapses.

The U.S. is rising because traders are cashing in their investments for US dollars and using them to buy US Treasury Bonds as a safe-haven asset.

 

[Brianrpaul98]

I think the answer partly lies in the fact that other governments are doing there part not to affect the US currency too much. The last thing the World economy needs is a flight from the US dollar.

 

[jarrettvaughan]

QUOTE (Brianrpaul98 @ Oct 9 2008, 12:25 AM) I think the answer partly lies in the fact that other governments are doing there part not to affect the US currency too much. The last thing the World economy needs is a flight from the US dollar.

I think that our Dollar is so closely link to the price of oil. Oil has dropped from 140 to 90, our dollar has dropped from 1.09 to .89 during the same time frame. Since oil prices are dictated by how much oil the world will need (or how much the US will need which is dictated by there economic strength), when the US suffer, oil prices suffer, and loose dollar value.

This is my perspective anyways. Not sure if this answered your question.

 

[GarthChapman]

The US dollar is still seen as a safe haven in tough economic times, even though it probably doesn`t deserve that status any more - and strangely even when they are the cause of the turmoil.

It is difficult to conceptualize just how immense the US economy is - but this current meltdown is showing us all just how big an impact they can have on the entire world. Their over-spending could bring most of the world into recession, all by itself. All because they sold the rest of the world those fancy new fangled financial products they created out of nothing - which turned out to be what they were worth - nothing.

 

[wealthyboomer]

This could be the beginning of a One World, One Currency, One Bank System

 

[wealthyboomer]

"The printing press may be the only way to prevent a self-sustaining credit panic, but it doesn’t come without a price; it lowers the U.S. dollar’s stature even further in the eyes of our foreign creditors.

Government inflation will defeat private market deflation. However, when the dust settles, I expect the Treasury and Fed to have its own set of negotiations with foreign creditors. The obligations they are assuming and monetizing are simply too enormous without inciting a potential panic among our generous foreign creditors. Maybe we’ll see a Bretton Woods-type agreement in 2009 — one where the U.S. dollar is devalued by 50% against certain foreign currencies overnight."

Source: Dan Amoss, CFA

 

[UTCVenturesLtd]

QUOTE (jarrettvaughan @ Oct 9 2008, 03:50 AM) I think that our Dollar is so closely link to the price of oil. Oil has dropped from 140 to 90, our dollar has dropped from 1.09 to .89 during the same time frame. Since oil prices are dictated by how much oil the world will need (or how much the US will need which is dictated by their economic strength), when the US suffer, oil prices suffer, and lose dollar value.

This is my perspective anyways. Not sure if this answered your question.


I remember when the price of oil went up, so did our dollar. Maybe the drop in oil price and also the commodity prices are the cause of the spread in exchange rates. At one point today the U.S. dollar almost gained 5 cents before closing to about half of that!!! If you look at the time when we had almost a .10 cent a dollar lead, then after that it hung around par and swung back and forth a bit but the trend headed south. If we are headed back to where we came from then we could lose another .30 cents! A scary move for a currency trader. It could still be a good time for a real estate investor to switch to the U.S. dollar, but lock in on some U.S. real estate rather than to hold the unstable currency for too long. One would think that the bottom of the U.S. house prices should be hit within a year.

 

[wealthyboomer]

This weekend when the G20 meet I’m worried “they are gonna come up with an idea for one central bank for the world.”

“This is the end of the monetary system…”

“The dollar hegemony is ending.”

Source: Ron Paul http://tinyurl.com/4dutaf