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  • Dollar Continues to Weaken

    The greenback slid further Thursday after the Trump administration was seen as stepping back from the strong dollar policy that has been in place since the 1990s.

    The dollar index was slightly lower, after falling sharply Wednesday on the initial comments from Treasury Secretary Steven Mnuchin that a weak dollar was good for U.S. trade. But when given the opportunity to clarify his comments at the World Economic Forum early Thursday, Mnuchin did not latch on to the strong U.S. dollar rhetoric used by past Treasury secretaries.
    https://www.cnbc.com/2018/01/25/us-d...ar-mantra.html
    "Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety."
    - Benjamin Franklin

    The new right wing: hate Muslims, preaches tolerance for Nazis.

  • #2
    So?

    A weak dollar can work to our advantage. The terms 'weak' and 'strong' are poorly chosen in this case. A weak currency is not always bad, and a strong currency is not always good.
    Any man can hold his place when the bands play and women throw flowers; it is when the enemy presses close and metal shears through the ranks that one can acertain which are soldiers, and which are not.

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    • #3


      https://fred.stlouisfed.org/series/DTWEXM

      The "strong dollar" of 2015-16 was due to the Fed's unwinding of quantitative easing.
      Watts Up With That? | The world's most viewed site on global warming and climate change.

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      • #4
        What's you opinion on this?

        Exchange rates constantly fluctuate.

        I lived through a devaluation of the dollar to the yen in 85. I would have done pretty good had I bought a lot of yen when I left in July 85 and returned in Jan 86.

        Also lived through a time when at the stroke of midnight all paper money became worthless if it didn't have a government stamp on it.

        Also lived through a devaluation of the Central African Franc to the Franc in 94.....actually did pretty well during that time.

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        • #5
          Does a 'weak' dollar benefit OPEC? If so, why is a weak currency a good thing?
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          • #6
            Originally posted by Jose50 View Post
            Does a 'weak' dollar benefit OPEC? If so, why is a weak currency a good thing?
            No it doesn't appear to benefit OPEC so the weak currency in this case is a good thing for US oil exports.

            American drillers have filled some of the supply gap left this year by OPEC and other oil exporters, who have cut production since January in order to drain a global glut of crude. Oil prices have been rallying on expectations that the producers will extend the deal, which is set to expire in March, through the end of 2018.

            https://www.cnbc.com/2017/11/01/us-c...on-record.html

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            • #7
              If, and that's a big if, I remember correctly:
              A weak dollar means a foreign currency is worth more, thus can purchase US goods at a lower cost; however foreign goods are more expensive for US purchasers.
              It only hurts those that use US dollars to purchase goods outside the US.
              It is basically a win for US producers.

              Of course as usual I'm probably looking at it in the wrong way.
              Too Much To Do Too Little Time

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              • #8
                Originally posted by FTCS View Post
                If, and that's a big if, I remember correctly:
                A weak dollar means a foreign currency is worth more, thus can purchase US goods at a lower cost; however foreign goods are more expensive for US purchasers.
                It only hurts those that use US dollars to purchase goods outside the US.
                It is basically a win for US producers.

                Of course as usual I'm probably looking at it in the wrong way.
                Broadly correct. A weak currency helps domestic exporters but hurts domestic importers. As export growth can help jobs growth and import curbs can aid domestic producers, there are significant economic advantages to weak currency. Set against that, the higher import cost can work to increase inflation, too much of which is undesirable. Policy makers try and achieve the right balance between these competing forces.

                At a personal level, a weak dollar will make foreign travel more expensive!
                Ne Obliviscaris, Sans Peur

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                • #9
                  Originally posted by FTCS View Post
                  If, and that's a big if, I remember correctly:
                  A weak dollar means a foreign currency is worth more, thus can purchase US goods at a lower cost; however foreign goods are more expensive for US purchasers.
                  It only hurts those that use US dollars to purchase goods outside the US.
                  It is basically a win for US producers.

                  Of course as usual I'm probably looking at it in the wrong way.
                  Yes, it has basically made me cancel a couple foreign purchases I wanted to make recently. The dollar is so weak right now, buying foreign goods is illogical as the price ends up costing way more than what the product is truly worth.

                  That's one problem, for a purchaser. Second problem, add-in Trump's tariffs and there will be less incentive for American manufactures to make their products competitive with foreign goods. For example, certain foreign cars will cost more in the future, pigeonholing Americans into American made cars due to price alone. Instead of allowing them to compete and win based on merit. Chevy will no longer have to be better than VW, as most American's won't want to overpay for the foreign car. In the end, we're left with less options and a less competitive market.
                  "Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety."
                  - Benjamin Franklin

                  The new right wing: hate Muslims, preaches tolerance for Nazis.

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                  • #10
                    Originally posted by Arnold J Rimmer View Post
                    So?

                    A weak dollar can work to our advantage. The terms 'weak' and 'strong' are poorly chosen in this case. A weak currency is not always bad, and a strong currency is not always good.
                    Exactly. At this particular time and place, this is actually good for America in terms of foreign trade.

                    Bad for the rest of us who have to live here, though.
                    Quis Custodiet Ipsos Custodes? Who is watching the watchers?

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                    • #11
                      Originally posted by Mountain Man View Post
                      Exactly. At this particular time and place, this is actually good for America in terms of foreign trade.

                      Bad for the rest of us who have to live here, though.
                      How does this work with global supply chains though? And doesn't it work against companies withdrawing their global stockpiles of dollars from abroad?

                      Latest I heard this dip is mostly caused by certain parties not taking the import taxes so well, and making some currency dumps in response.

                      Personally, it sucks for me since I have clients who pay in dollars. Same work, less money
                      Wisdom is personal

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                      • #12
                        Originally posted by Arnold J Rimmer View Post
                        So?

                        A weak dollar can work to our advantage. The terms 'weak' and 'strong' are poorly chosen in this case. A weak currency is not always bad, and a strong currency is not always good.

                        When you look at the US dept load and the Trillions of dollars reqd to settle this a weak/low dollar would help ......in the real world the US dollar should be worth about .45 cents.......

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                        • #13
                          Originally posted by Karri View Post
                          How does this work with global supply chains though? And doesn't it work against companies withdrawing their global stockpiles of dollars from abroad?

                          Latest I heard this dip is mostly caused by certain parties not taking the import taxes so well, and making some currency dumps in response.

                          Personally, it sucks for me since I have clients who pay in dollars. Same work, less money
                          It is actually the opposite to what you suggest. Some US companies have huge cash piles earned abroad, most famously Apple. A weak dollar will mean the returning cash is converted to a larger amount of Dollars.
                          Ne Obliviscaris, Sans Peur

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                          • #14
                            Originally posted by Jose50 View Post
                            Does a 'weak' dollar benefit OPEC? If so, why is a weak currency a good thing?
                            Having a near monopoly in oil production benefits OPEC. The opening of major new US, Canadian, and European production (North Sea), along with Russian production has robbed them of their monopoly and prices have fallen dramatically. That's not to mention that recoverable world oil and gas reserves have hit new highs in quantity as a result.

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                            • #15
                              Originally posted by Escape2Victory View Post
                              Broadly correct. A weak currency helps domestic exporters but hurts domestic importers. As export growth can help jobs growth and import curbs can aid domestic producers, there are significant economic advantages to weak currency. Set against that, the higher import cost can work to increase inflation, too much of which is undesirable. Policy makers try and achieve the right balance between these competing forces.

                              At a personal level, a weak dollar will make foreign travel more expensive!
                              From your point of view, travel to the US will become more affordable as the USD weakens against other currencies, in your case the GBP.

                              The old economists' mantra is "there's no such thing as a free lunch." Broadly speaking, a relatively weaker USD helps exporters, hurts importers, makes Americans eschew foreign travel, but attracts foreign tourists to the US, makes petroleum more expensive which will cut into the summer vacation season and hurt the US tourist trade -- but it also drives up the interest that the US Treasury will pay on its debt. That's a serious issue, and one that is being assiduously ignored by this administration, for obvious reasons.

                              Another winner from a weak USD is big-city real estate development, especially in NYC. Foreigners will park a lot of money here buying stuff on the cheap. When the USD flopped in the Summer of 2008, foreigners came here and snapped up all kinds of bargains. That can only help Trump and his family.
                              I was married for two ******* years! Hell would be like Club Med! - Sam Kinison

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