The dollar is getting hammered because the US is the biggest debtor nation in the world. If it was a company it would be bankrupt. Debt repayments are huge yet the US continues to issue more and more debt in the form of T bills. This is both inflationary and expands the money supply thereby further devaluing the dollar.
Also, you have to remember that since 1971 (when the dollar was backed by gold reserves) the dollar is backed by nothing other than goodwill. There is nothing to stop the Federal Reserve from printing more and more dollars. This further erodes value.
Currency markets are moved by interest rates and by macroeconmic data. Interest rate differentials make the pound and the Euro more attractive to investors than the dollar. Therefore, investors sell dollars and buy pounds and Euros. On the macro front, the US has hige twin deficits in external debt to GDP and in the current account. This is bad for the dollar.
Finally as Rock the Casbah says, it is the interests of the US to have a weak dollar as it makes American goods cheaper for export markets thus inproving the balance of payments deficit.
The currency ma
Patriotism cannot be our final spiritual shelter; my refuge is humanity. Tagore, Bengali Poet
The dollar is getting hammered because the US is the biggest debtor nation in the world. If it was a company it would be bankrupt. Debt repayments are huge yet the US continues to issue more and more debt in the form of T bills. This is both inflationary and expands the money supply thereby further devaluing the dollar.
Also, you have to remember that since 1971 (when the dollar was backed by gold reserves) the dollar is backed by nothing other than goodwill. There is nothing to stop the Federal Reserve from printing more and more dollars. This further erodes value.
Currency markets are moved by interest rates and by macroeconmic data. Interest rate differentials make the pound and the Euro more attractive to investors than the dollar. Therefore, investors sell dollars and buy pounds and Euros. On the macro front, the US has hige twin deficits in external debt to GDP and in the current account. This is bad for the dollar.
Finally as Rock the Casbah says, it is the interests of the US to have a weak dollar as it makes American goods cheaper for export markets thus inproving the balance of payments deficit.
The currency ma
Patriotism cannot be our final spiritual shelter; my refuge is humanity. Tagore, Bengali Poet