Comments on: im confused on currency movements ?

By: thomas p

thomas p — Tue, 30 Nov 1999 00:00:00 +0000

It is a simple dilution of a currency. Similar to the value of your 25th pair of shoes. The value of a pair of shoes declines secondary to over issuance of dollars and bonds to the lenders for the dollars printed results in their value declining, i.e., inflation or a devalued currency.

By: Dan W

Dan W — Tue, 30 Nov 1999 00:00:00 +0000

The MOST important of your 3 is the interest rate.
Money goes where it can make more money, the interest rates are now down around the globe sqeezing the currency markets.
A recesstion is a buyers market, producers have to sell to stay in business so a low offer is better than no offer. $200,000 homes are now $125,000 but you can offer $110K.
Supply and demand at work. TV pundits are claiming that the govt is printing more money, not true, we are going into debt to be repaid later.
If we printed money that would be pay as you go.

38% of all currency trades are EUR/USD euros to dollars, NOW@ 1.2716 , 1 euro is worth $1.27US, Currency is not bought or sold, it is traded in pairs, Bad news on the US market is supposed to raise the euro But europe is a lot of small countries trying to protect their intersts with only a common currency as a stablizer
90% of currency traders lose money, the market changes constantly and eur/USD fluctuates in a 150 point (PIP0 range.

By: tkoppc@ymail.com

tkoppc@ymail.com — Tue, 30 Nov 1999 00:00:00 +0000

There can be a lot of reasons, but in general, it was driven by monetary policy.

Money supply was increased to lower interest rate, which was the cost of capital, to boost the economy.

By: WarrenBB

WarrenBB — Tue, 30 Nov 1999 00:00:00 +0000

actually, (1) isn't exactly correct so i'll explain it last.

at this time, things are very screwy with the world, so it's best to not try to tie these examples to what's happening. but generally…

(2) let's say i'm an investor in brazil. i'm thinking of either investing in us bonds or uk bons. if the us federal reserve lowered interest rates, i'm going to be less interested in us bonds and likely more interested in uk bonds because the returns are better. so i buy the uk bonds, but first, i sell my brazilian currency in my bank for uk currency. this drives up demand fo uk currency, and the uk currency rises. but since there is less interest for us bonds, there is less demand for us $, so the strength of the us $ relative to other currency falls.

3) if a country's bank starts printing money, this raises the fear of inflation happening, which makes the us dollar less valuable in the future. so investors' demand for us assets of any kind will fall, which means that the demand for us $ falls. as demand for $ falls, so does the strength of the dollar relative to other currencies.

1) if there is a recession in any single country, it means that the demand of imports will fall and its currency should actually strengthen. if the us went into a recession, the demand for foreign luxury items imported to the us falls. this means that the us demand for foreign currency will fall, and the dollar actually strengthens. but if a country goes into a protracted recession, theoretically, the value of its currency can fall if foreign investors stop investing in its bonds and stocks.