You are actually asking several questions. Firstly, what is going on with the dollar.
I think the answer is that the world is losing faith in the dollar. After all, it is not backed by anything and the Fed can just carry on printing them in order to pay off the enormous national debt. The problem with this strategy is that it is inflationary which further erodes the value of the dollar vis a vis other currencies. Another factor, to consider is that a falling dollar helps the American balance of payments, so politically a weak dollar is not a bad thing as it makes imported goods more expensive and American made goods cheaper.
Finally, foreign holders of dollars, specifically China, Japan and the Gulf states will want to reduce their dollar exposure over time. This again will weaken the dollar gradually.
So do I think the dollar will weaken? Yes but slowly and not dramatically.
The pound has risen against the dollar because the UK economy is fairly strong and strong economies generate inflation. In oredr to control inflation, central banks raise interest rates and higher interest rates give better returns to savers. Therefore, in the expectation of higher interest rates, investors are selling dollars and buying ponds. This causes the pound to rise against the dollar.
Hope this helps. Just my view so its probably wrong!
Patriotism cannot be our final spiritual shelter; my refuge is humanity. Tagore, Bengali Poet
You are actually asking several questions. Firstly, what is going on with the dollar.
I think the answer is that the world is losing faith in the dollar. After all, it is not backed by anything and the Fed can just carry on printing them in order to pay off the enormous national debt. The problem with this strategy is that it is inflationary which further erodes the value of the dollar vis a vis other currencies. Another factor, to consider is that a falling dollar helps the American balance of payments, so politically a weak dollar is not a bad thing as it makes imported goods more expensive and American made goods cheaper.
Finally, foreign holders of dollars, specifically China, Japan and the Gulf states will want to reduce their dollar exposure over time. This again will weaken the dollar gradually.
So do I think the dollar will weaken? Yes but slowly and not dramatically.
The pound has risen against the dollar because the UK economy is fairly strong and strong economies generate inflation. In oredr to control inflation, central banks raise interest rates and higher interest rates give better returns to savers. Therefore, in the expectation of higher interest rates, investors are selling dollars and buying ponds. This causes the pound to rise against the dollar.
Hope this helps. Just my view so its probably wrong!
Patriotism cannot be our final spiritual shelter; my refuge is humanity. Tagore, Bengali Poet