Weak US dollar or strong Euro or Both??
May 27th, 2004 | 12:05 PM
#1
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Weak US dollar or strong Euro or Both??
This may a be a "which came first the chicken or the egg?" question but I was just wondering. Will it be a continued trend to see the US dollar weakening against the Euro. By today's standards my European trip will probably cost about 25% more than it would have several years ago. It would be great if that number went down, but I really hope it doesn't go up by spring of 2005. Any thouughts on current economics?
May 27th, 2004 | 01:38 PM
#4
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The current political administration has made no secret of its intent to continue pursuing a so-called "weak dollar" policy against the Euro. It makes out exports cheaper to buy overseas and it also attracts a great deal of foreign investment since investors get more for (shares, etc.)their Euro.
My short answer would be you'll see this trend remain the same until the election and possibly afterward depending on the election outcome UNLESS some economic factor or factors forces a change of thinking prior to November.
My short answer would be you'll see this trend remain the same until the election and possibly afterward depending on the election outcome UNLESS some economic factor or factors forces a change of thinking prior to November.
May 27th, 2004 | 03:04 PM
#5
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I wouldn't consider the U.S. dollar's value to the Euro several years ago when it was below $0.90 U.S./Euro to be a very realistic benchmark. It was nice for travelers while it lasted. With U.S. interest rates seeming poised to rise, I would be surprised to see much more erosion in the value of the U.S. dollar to the Euro. (But hey, I spend most of my life in a constant state of surprise! 
).
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May 27th, 2004 | 03:24 PM
#6
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Despite Singletail's assertions, there are two sides to this issue. The Euro nations fear a weak dollar because it has negative effects on their trade with the US, but they also refuse to cut interest rates -- a measure that would free up capital (i.e., increase circulation of Euros, thereby making them more available and LESS valuable) and would help increase the anemic growth rates in parts of the Eurozone (Germany, France; Italy and Spain have been OK recently).
The US is still growing out of the economic effects of the 9-11-01 devastation and will likely raise its own extremely low interest rates soon, with an eye toward raising them again near or shortly after the election (remember, the US currently has, for it, inordinately high oil prices and a stronger dollar will help lower them). It is unlikely that the dollar will be much weaker viz. the Euro by April 2005.
The US is still growing out of the economic effects of the 9-11-01 devastation and will likely raise its own extremely low interest rates soon, with an eye toward raising them again near or shortly after the election (remember, the US currently has, for it, inordinately high oil prices and a stronger dollar will help lower them). It is unlikely that the dollar will be much weaker viz. the Euro by April 2005.
May 27th, 2004 | 03:38 PM
#7
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Opec is saying it wants to price oil in euros instead of the greenback, if that happens the dollar will weaken more and we will see disorder around the world. SA is holding that over our heads as they own billions of dollars from oil sales and bond purchases from many years. Pricing in oil in euros will upset the whole world ecomonys, and the stock markets will sink like the Titanic. Buck
