US Dollar sags to new record low

[Skaman]

http://news.bbc.co.uk/2/hi/business/3368567.stm

The US dollar has skidded to yet another record low against the euro.
The US currency also fell against the pound, dropping to levels last seen in September 1992.

The slide followed a prediction from Ben Bernanke, a governor of the US Federal Reserve, that US interest rates would remain low for some time.

Concerns about the US trade deficit and security fears continued to hit home, and by 1930 GMT on Monday the euro was worth $1.267.

The pound, meanwhile, was worth $1.8068 - up 0.6% on the day.

Despite the driving strength of US shares, registering near-triple digit gains on Monday, precious metals fulfilled their traditional role as a safe haven for worried investors.

Gold shot up to a 14-year high of $424 an ounce in London, driven by the weakness of the dollar and the continuing worries about global security which saw it rise 20% in value in 2003.

Patience needed

US interest rates are at a 45-year-low as the central bank has held its key overnight rate at 1% since June 2003.

euro/dollar exchange rate



The ups and downs of the euro against the dollar and 23 other currencies

Mr Bernanke said he believed that the Federal Reserve's low interest rate policy was "justified by the current low level of inflation".

He concluded that as the US central bank had no need to counter inflation it could afford to keep rates low to help firms gain from the emerging economic recovery.

"For now, I believe that the Federal Reserve has the luxury of being patient," Mr Bernanke told a conference of the American Economic Association.

He cited rising commodity prices as a sign of economic recovery, though he noted that the labour market remains weak.

With interest rates set to remain at rock-bottom levels, global investors are less keen to buy US assets because the returns are slimmer - and therefore need fewer dollars, bringing the exchange rate down.

But that could have a sting in the tail, some economists warn, since the huge trade and government deficits on which the US is running depend on foreign buyers of US debt to stay manageable.

Dollar's slide

The dollar declined 21% against the euro in 2003.

It has also suffered against the yen, though the Japanese government has stepped in prevent an overly-strong yen from hurting the country's exports. The dollar is currently worth 106.5 yen.

Mr Bernanke dismissed fears of a "dollar crisis", saying there was no serious risk.

He said 2003 seemed to have "marked the turning point for the US economy", giving grounds for optimism about increased growth and job creation.

Analysts said Mr Bernanke's remarks had confirmed their expectations that current trends would continue.

"It's a continuation of where we left in 2003 - the US needs more inflows to fund its widening current account deficit...but stronger growth will exacerbate the deficit," said Steven Pearson of Halifax Bank of Scotland.

http://newsimg.bbc.co.uk/media/images/39667000/jpg/_39667087_dollar203.jpg

[Skaman]

Not good, not at all. Canada will be tied down to the hull of this sinking ship for the time being.

[budanski]

Re: the dollar dropping. Exports get cheaper, imports get more expensive.


US factories surge in Dec, helped by dollar


******* (http://www.*******.com/printerFriendlyPopup.jhtml?type=economicNews&storyID=4066068)

By Ros Krasny

CHICAGO, Jan 2 (*******) - U.S. factory activity expanded at the fastest pace for 20 years in December, a survey showed Friday, adding evidence that a manufacturing recovery is under way and benefiting from the lower dollar in the form of higher exports.

The Institute for Supply Management said its barometer of manufacturing activity jumped to 66.2 in December from 62.8 in November. Wall Street economists had forecast the index at 61.0.

U.S. stock prices rose on the data while U.S. Treasury bond prices fell sharply.

"It's very positive for the the overall economic outlook, suggesting continued momentum in the manufacturing sector," said John Silvia, chief economist with Wachovia Bank in Charlotte, N.C.

A reading above 50 in the index signals growth in the industrial sector, which comprises about a sixth of the U.S. economy. Factories were hard hit by the U.S. recession that officially ended in November 2001 and have been slow to recover until now.

Manufacturing jobs have been even slower to rebound, but according to the ISM survey are on the way back.

ISM's jobs component was 55.5, up from 51.0 in November. The employment index was above 50 for the second straight month after being lower 37 straight months -- a trend that could have implications for the December payrolls report due on Jan. 9.

Ian Shepherdson, chief U.S. economist with High Frequency Economists, said the current pace of factory expansion "cannot possibly be achieved with the existing manufacturing work force."

DOLLAR BOOSTING EXPORTS

ISM's export orders index rose to 60.4 from 57.9, with sectors as diverse as furniture, primary metals, industrial and commercial equipment and chemicals contributing.

"Normally there is a lag between a currency starting to weaken and export growth starting, and we are finally starting to see the results of the lower U.S. dollar," Tom Duesterberg, president of Tempe, Arizona-based ISM, told *******.

With business confidence up, "we expect more robust capital investment this year" in the form of new productive capacity and hiring, Duesterberg said.

New orders, often seen as reflective of future growth, rose to 77.6 from 73.7, the highest since July 1950.

Overall, 17 of 20 industries in the manufacturing sector reported growth in December.

"It's strong, strong and strong. There are no weak spots. Inventories are still too low, both customer and factory inventories. So this thing is just going to keep going," said Ram Bhagavatula, chief economist with the Royal Bank of Scotland in New York.

The surging factory sector could put pressure on the Federal Reserve to change its accommodative monetary policy some time in 2004. Official interest rates have been held at 45-year lows by the Fed to encourage growth.

Futures markets expect the Fed to raise rates by a quarter point by the end of July, with a second hike by the end of September.

The monthly ISM survey is derived from data provided by purchasing executives at over 350 industrial companies.

[Ratamacue]

Blame American commercialization and Walmart.

[Shake n Bake]

If U.S. currency was good enough for Saddam and his sons when they got into a rut ....

Then it's sure as hell good enough for me

[stuntman]

AHH At one point the Yen was worth alot more so I'm not worry!
Let the euros have there fun, it will end soon!
And I know because of my vast experience in anything related to business!
If not convinced ask Allen Greeceball!

[Jack Mehoff]

Blame Costco

[Deuterium]

Those of us who are over the age of 19 and have lived overseas for sometime are quite familiar with the Dollar exchange rate going from one xtreme to another. I remember the Dollar over 3 DM and I remember it well below 2 DM. What's your point Ducy?

[Flagg]

Not good, not at all. Canada will be tied down to the hull of this sinking ship for the time being.

Ducimus:

Why is it not good?

You're an armchair general....are you now an armchair economist?

If so, I hope you have a better track record of gloomy predictions.

The fall of the US dollar is not the end of the world....proof exists in historical exchange rate figures from just 10 years ago.......the US dollar was valued LOWER 10 years ago than it is NOW against ALL major currencies.

I also don't see how you view Canada as "being tied to the hull of this sinking ship"...Canada's currency has appreciated in value approximately 25% in the last 24 months against the US dollar....so how is Canada suffering? In fact I just read 2003 was the best performance year EVER for the Canadian dollar....how do you justify your comment when faced with even that single fact?

Any economic problems Canada develops cannot be so easily blamed on the US......maybe first learn the facts, then blame your own government's economic policy.

The fall in value of the US dollar is necessary......it was overvalued, just as its DOW and NASDAQ stock exchanges were 4 years ago.....it was inevitable.

The fall in value of the US dollar will allow it's business community to price more competitively in domestic and global markets. It will also help reduce the huge trade deficit that currently exists with countries benefitting enormously in recent years from the overvalued US dollar by exporting to the US.

The downside for US citizens is that it results in much more expensive overseas trips and goods.

The downside for non US resident holders of US dollars is that their cash horde has lost some of its value IN THE SHORT TERM.

FACT: the US dollar is and will continue to be the first choice in completing monetary transaction for our planet......period.

I suspect that your young age, your ignorance of currency exchange rates(both historical and current), combined with your complete lack of any relevant knowledge or experience regarding economics resulted in:

Incorrect Ducimus Doomsday Prophesy #687

[cut]

bollocks... should really exchange my dollars left over from last summer. :cantbeli:

[Flagg]

Dang Deuterium.......you beat me to it......I was too damn long-winded again....

[SOG]

its anti US so people lach onto the "moore" sindrome once again simply pointing out a single simple period in time and using relagtion vs a wider scope. same **** with the yen, the pound has always been higher, and the euro is the combined effort of many countries to have something stable against the dollar since thier economies had countinued to run down. eventually even though the euro is high it will have to go up and down due to inflation. if it doesnt then you have alot of hurt citizens who have the almighty current currency, but get it in such small amounts it amounts to nothing.

see Deuterium's post about democrats and the economic stats of the US in relation to what people are preaching. the US has tightened its belt, almost everyone is hard at work and basically stabilizing the economy and its as solid as its been in years. solid is not record highs because you have to come off that high and get stability and alot of people get axed like when the computer companies all came off thier high and axed 100,000 employees collectively and twits thought it was the end of the market. no, the market finally stopped indulging itself and finally stabilized by cutting the excess fat obtained to meet excess demand. that translates to, when we go level the world gets hit because it feeds off of the US's excesive industry and greed.

this is as common as the circle is round. which in turn, all things come up, down and finally back around.

[Skaman]

Moore is hardly an author to follow as the word of god. I prefer Chomsky.

Check out his book "What Uncle Sam Really Wants"

Additionally, I realize this is temporary, hence my inclusion of the phrase "for the time being", and am I wrong in accessing the situation as "not good"?

Please.... :roll:

[Flagg]

am I wrong in accessing the situation as "not good"?

Yes....you are wrong.

[DE_Six]

Chomsky...eesh. That's never good, even for a leftist.

Besides, the exchange rate is a cycle in a market economy, as many have just pointed out. Simple principles like offer and demand will tip the balance the other way at the end of this cycle, only to go back all over again. Let's have some trust in the good ole "invisible hand".

As for Canada....well, there is no denying our situation is closely tied to that of the US. But our government isn't exactly brilliant either. Especially here in the last North American french-speaking outpost... :cantbeli:

[SOG]

Moore is hardly an author to follow as the word of god. I prefer Chomsky.

Check out his book "What Uncle Sam Really Wants"

Additionally, I realize this is temporary, hence my inclusion of the phrase "for the time being", and am I wrong in accessing the situation as "not good"?

Please.... :roll:

for preffering chomsky you sure post alot of moore. i dont mind chomsky and if you actually followed what he wrote then i dont see why you entertain moore or why you have defended his writings in the past. however chomsky sees everything the west does as bad, poor, or unnaceptable. i do appreciate his plausible connect the dot scenarios and i see some as true but i also see he simply feeds off haters of the US and its ways and life just like moore.


and am I wrong in accessing the situation as "not good"?

situation is NORMAL. in every way shape and form.

[Russian Texan]

Guys, let me tell you: An average quality of life in US during economic crisis is better than quality of life in the rest of the world during prosperity times and "up cycle" period. It is a generalization of course but still...
The value of US currency is secured by the desire of the rest of the world to be like US, whether it's good or bad decide for yourselves.
Relax...dollar is not going anywhere for a long time.

[Roger Rabbit]

I don't like to step on anyones toes here but isnt this militaryphotos.net?

[martinexsquaddie]

chomsky very overated USA always bad here saved you having to read his books rofl .
Problem is people like saddam don't go away unless pushed HARD :lol:

[WARPIG]

Not good, not at all. <<I agree. Your not wrong in thinking this. Canada will be tied down to the hull of this sinking ship for the time being.<<Sinking ship?? Hmm blame the US again? I am shocked and amazed. Take a slightly interesting factoid about the "weak dollar" and turn it into anti-Americanism rhetoric.

Just a food for thought. Corporate corruption in the US has gained global notoriety and has had quite an impact on the National economy. Political events have taken much of the blame for the weak dollar but the global community of investors must have more negative issues with the recent public displays of corporate corruption. US Government leadership has tried to take measures to control this and have seen slow recovery in the wake.
Japanese corporate corruption is handled slightly differently. Can anyone say Yakuza? I would assume corruption is less of a problem in similar countries. The Euro is going to stay strong as the EU gains strength. The only way it will falter is if the two superpowers make greedy moves in their seperate interests. As long as solidarity is the goal.. the Euro will remain strong.

[Ichhabe]

Well... The US. Dollar goes up,...and the US. Dollar goes down. So does the tide.
It ain't no reason to panic untill Swiss bank's start using it as a cheap alternative to heating.

The best would of course be that the Dollar and the Euro was 1:1 and only went a little away from eachother from time to time.
And what would be best? Hell if I know, I leave that to the economics...