The US Dollar is in the dumps!

[kev374]

Just got back from Vancouver, Canada and the local stores there were asking 1.06 – 1.1 USD for each Canadian dollar. Sign of the times eh?

what a shame…good job Mr. Bernake!

[bob007]

well inflation cannot be behind. high long term interest rates follow inflation.

you do not want to see what 10% mortgage rate does to California real estate values.

[AK]

I hear from Canadians that the new weekend diversion is to head south for shopping sprees, exchanging their Loonies for the worthless native currency.

On the plus side, it’s good for retailers in border states … the U.S. will make a small profit reselling imported goods, before sending the rest of the money overseas again.

[bsrsharma]

what a shame…good job Mr. Bernake!

No shame; That is THE intention. BB wants you to shop in US and attract Canadians to shop in US too.

[Daniel]

Kev374:

I’m gonna throw my hat in the ring on this one: I believe the US dollar is about to bottom here (against the euro, for example). The dollar sentiment is more bearish than ever, and this is usually a telling sign. Also, by “here”, I don’t mean today or tomorrow. Let’s just say I believe 5 years down the road the dollar index will be higher than it is today. Perhaps much higher.

PS: I have no money riding on this; it is just my opinion.
PPS: it’s likely the dollar will still go lower against the yuan, as China will have to revalue at some point.

[LA_Renter]

US Dollar index just broke through 78 into the 77’s. How low can she go?? Europe is really going to get hit hard with dollar over 1.42. The ECB and BOE will eventually have to cut IMO.

[Diego Mamani]

Indeed. The easy money policies of Alan and Ben have resulted in our dollars (what we get in exchange for our labor) having less and less purchasing power. And for what? To bail out irresponsible gamblers and speculators who take us from one bubble to the next. The text below summarizes the situation nicely. 

From:

http://themessthatgreenspanmade.blogspot.com/2007/09/cowboy-keynesianism.html

"US public and private debt is hugely out of equilibrium. There are four ways equilibrium can be restored. US consumers and the US government can cut their expenditure to repay the debt. They can default on some of the debt. They can renegotiate some of the debt. Or the Fed can inflate away the real value of the debt.

Mr Wolf recognises that inflation is the easiest course. Realistically, it may be the only option open to a country that finds it difficult to live within its means. The US will have traded toxic debt to China for lead-painted toys."

[bsrsharma]

How low can she go??

39? 19? … When exporting is more profitable than importing is the proper answer. We have ways to go before that. When investors start asking "it costs how much to hire a Chinese/Korean/Mexican/etc.," and then say "wow, that is too much. Let us move the production from those places to  Alabama/Oklahoma/etc., and reduce the cost "

[NeetaT]

I don’t care what happens as long as it produces 10% or better returns on CD’s.

[JWM in SD]

“I don’t care what happens as long as it produces 10% or better returns on CD’s.”

But the dollar has lost almost 9% in the past year? still think that is a good idea???

[NeetaT]

I think higher interest rates strengthen the dollar and cause deflation, which is what us responsible people are looking for.

[HereWeGo]

The Fed doesn’t really care about the value of the dollar with respect to foreign currencies, folks.

Strangely, though, the Fed tends to warn against “fair trade” on the rationale that imports keep inflation in check.

I don’t entirely understand how to resolve those two views.

[kicksavedave]

I have a question for the economic gurus among us.

Recently the Fed lowered its rate by .50, and 30 year fixed mortgage rates shot up immediately.

So if the Fed raises its rates to try and control inflation, why would we not then expect to see lower mortgage rates as a result?

Being about 3 to 4 months from needing to lock in a loan, this is important to me, but I don’t have that much understanding of how these factors interact.

[bsrsharma]

Fed doesn't really care about the value of the dollar with respect to foreign currencies

Not True. Exchange rates are important indices that point to the value of US $. FED's primary mission is to preserve that value. { Without value preservation, paper money is just paper and not money anymore }

[jimmyle]

Warren Buffet predicted this whole thing 2 years ago when he purchased $20 Bil Euros for his funds.

I was in Thailand 2 weeks ago for my honeymoon and Europeans were getting ~47 Baht for 1 Euro while I was getting ~34 Baht for a dollar. The reverse is true 4 years ago.

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