Dollar Continues to Weaken

[Salinator]

https://www.cnbc.com/2018/01/25/us-d...ar-mantra.html

Seems to me that works hand-in-hand with bringing overseas money back home and increasing US production.

[Mountain Man]

On this thread, Doc tells us that the dollar is weakening, whilst elsewhere he tells us that the economy is "blasting off.'

Obviously, Doc got it wrong either in this one or the other one...or maybe both.

Either it's getting better or it isn't, Doc - pick one, OK?

[The Doctor]

Same general story with the broad index, which dows include china. The dollar is down
[ATTACH]72260[/ATTACH]

Down compared to what time frame? It's currently around where it was from the late-80's to mid-90's.



The very strong dollar of the early 1980's was the result of the Fed smothering double-digit inflation. You could buy 15% treasuries back then.

The very weak dollar of 2008-14 was due to the Fed's quantitative easing program. The "strong" dollar of 2015-2016 was due to the ending of the QE program.

[Work_permit]

Euro still accounts for over half of that though..



A bit strange the Chinese currency isn't in there, since it is kept artificially low, it would push the dollar up by it's very presence no ?

Edit, although it's arguably more complex than that

https://ipfs.io/ipfs/QmXoypizjW3WknF...lar_Index.html

Same general story with the broad index, which dows include china. The dollar is down
C35E6AD4-DF1F-415B-A037-16F92A72772F.png

[Snowygerry]

Euro still accounts for over half of that though..

Two primary measures of the trade-weighted dollar are used. The first is the U.S. Dollar Index, created in 1973. It is calculated using six major world currencies: the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. The euro makes up more than 57 percent of the index weighting.

A bit strange the Chinese currency isn't in there, since it is kept artificially low, it would push the dollar up by it's very presence no ?

Edit, although it's arguably more complex than that

https://ipfs.io/ipfs/QmXoypizjW3WknF...lar_Index.html

The trade-weighted US dollar index, also known as the broad index, is a measure of the value of the United States dollar relative to other world currencies. It is similar to the U.S. Dollar Index in that its numerical value is determined as a weighted average of the price of various currencies relative to the dollar, but different currencies are used and relative values are weighted differently. The base index value is 100 in March 1973.[1]

The trade-weighted dollar index was introduced in 1998 for two primary reasons. The first was the introduction of the euro, which eliminated several of the currencies in the standard dollar index; the second was to keep pace with new developments in US trade.[2]

[Work_permit]

The "weak" Dollar is in fact a only weak vs. the Euro I think, it is up vs. the British pound and the Yuan for instance.

The ECB is still supporting its currency with low interest rates while the US Fed Bank has been rolling down support and pushing interest rates up.

The dollar is down against it’s trade weighted basket of currencies.
22A7EBDC-3176-42F8-BBD0-B55FE20CD8F1.png

[Snowygerry]

The "weak" Dollar is in fact a only weak vs. the Euro I think, it is up vs. the British pound and the Yuan for instance.

The ECB is still supporting its currency with low interest rates while the US Fed Bank has been rolling down support and pushing interest rates up.

[T. A. Gardner]

Just for you...

[Duncan]

Oh thank ****. The exchange rate is killing my porn bills.

[Mountain Man]

Sadly, New York property is beyond my modest means, just about to pay off the mortgage on my own house.

I would like to pick up some Berkshire Hathaway stock though, so for me as an individual, a weak dollar and stock market crash would be the perfect combo.

Well, then...we all hope for your sake that your stock market crashes just as soon as possible!

[Escape2Victory]

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.

Sadly, New York property is beyond my modest means, just about to pay off the mortgage on my own house.

I would like to pick up some Berkshire Hathaway stock though, so for me as an individual, a weak dollar and stock market crash would be the perfect combo.

[Cambronnne]

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.

Wait, you're blaming Trump for the weak dollar?
Does that mean the weak dollar in 2009-10 was Obama's fault too?

If Trump caused the weak dollar it stands to reason that he is also responsible for the roaring stock market and strong jobs market.

Trump is awesome!

[slick_miester]

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.

[T. A. Gardner]

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.

[Escape2Victory]

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.