Developing countries
Of course it will increase prices of imported commodities. But exchange rate is not a good indication of strength of an economy. If growth rate is high, inflation will automatically increase and currency starts to devalue. Per capita income increases and thus overall economy grows. A country should be worried if growth rate is low but inflation is high.
Dollar is an international currency and more than 80% of total foreign currency transactions r made in dollars. That is why it has managed to keep itself at a good position. Relative strength of a currency depends on overall economic situation and inflation in a country. Sometimes countries devalue their currency on purpose
Who told u that dollar is rising?
It is only rising against a few, very weak, currencies. Dollar outlook is not very positive and I dun think it is going to get any stronger in next couple of years.
Sasha is right.
Both Eur and Usd r going to get weaken as I dun see any solid strength in U.S economy or solution to Eurozone debt problems.
Stick to your rules
Originally posted by JogiDollar is an international currency and more than 80% of total foreign currency transactions r made in dollars. That is why it has managed to keep itself at a good position. Relative strength of a currency depends on overall economic situation and inflation in a country. Sometimes countries devalue their currency on purpose
Can explain more about the part that some countries devalue their currency on purpose !!!
why would they do that?
Originally posted by uniquetrader
Sasha is right.
Both Eur and Usd r going to get weaken as I dun see any solid strength in U.S economy or solution to Eurozone debt problems.
In recent past, japan was accused of weakening its currency intentionally. I dun see any serious danger to either U.S or Eurozone as they have already passed the difficult phase of crisis. No doubt that recovery is taking long especially for Eurozone but I dun think it will have any serious impact. Recent U.S shutdown has almost no impact on dollar as most analyst expect this shutdown to end soon.