How is the current economic crisis affect on exchange currency in a country?
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This entry was posted on Sunday, June 7th, 2009 at 7:54 am and is filed under Currency Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
June 7th, 2009 at 7:54 am
Right now it's not so bad. Wait until Obama's inflation hits… We'll be spending 50 bucks for a loaf of bread. Better get a bread maker now.
June 7th, 2009 at 7:54 am
You can save your money, you will not have to make bread. You can look at currency markets and answer your own question, but to help. Though the US has really been hit hard, our currency remains strong for a single reason. When all heck is breaking lose, people want to hold dollars. Our political system more stable than any other, and people want to protect their money. Japans currency is also strong, but mainly because the Japanese government is more of saver than a spender. In other words, the rest of the world is not worring about them just printing yen.
You can keep this up through most of the worlds currency's. Will we have some inflation pressure when this is over, yes we will. But, we are smart enough to get it under control. We have never had hyper-inflation. I hope this helps you.
June 7th, 2009 at 7:54 am
It has a big effect. Let's take Sterling as an example….
The Bank of England have slashed interest rates to try and bolster the economy. They have also 'created' £125bn of money to pump into the economu (quantitative easing) and the levels of debt and defecit are huge. So, the net effect is a serious weakening of the pound, and exchange rates have tumbled as a result. This is becuase investors get less return due to lower rates, and move funds to percieved safer currencies such as the USD and JPY.
So, the eonomic crisis has a big effect on exchange rates as it determines where investors place funds for the best yeild.