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It is indeed a fast appreciation rate for the USD. It is fast because it was long overdue. On the Lebanese level, I think it will have a profound impact on the behavior of people. Firstly, anyone buying a European product, like a car, will delay his purchase as much as possible to get a better exchange rate (a similar behavior has been noticed by gas stations who say that people are waiting for every Wednesday's new prices to fill up since the trend of oil is downwards). Another will be the end of the recent rush on real estate. This rush was partly caused by an overdue correction in real estate prices which had been stagnant for a long time. But many people fail to see that another major factor was that at the levels of 1.55/1.60, many investors were rushing to "get rid of their worthless dollars before they melt even more". With a Euro at 1.41, this clearly has changed and will change more if we reach levels like 1.30 or lower.
For those who are interested about the history of the Euro and also for those who do not believe it will go down further I say it has plenty of room, At today's 1.40/1.41 we are still higher than any of the figures below over a 7 year span. Please see below
With all the bad news coming out of the financials in the US, I love the way the psychological barrier of 1.40 was passed. Once again this correction was so overdue that it is happening at lightning speed. Expect 1.35 in month or so with a few jitters above 1.40 in the next few days
With all the bad news coming out of the financials in the US, I love the way the psychological barrier of 1.40 was passed. Once again this correction was so overdue that it is happening at lightning speed. Expect 1.35 in month or so with a few jitters above 1.40 in the next few days
http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax&w=1&t=l&a=200 Check out this chart and decide if what’s going on with the dollar is normal behavior. The last two months dollar spike looks a lot like the oil bubble early this summer. I call that market manipulation. It is also worth mentioning the currency instability is caused the dollar not the euro.
I liked your chart very much. I wonder if you looked at the chart in 2002 when the Euro went from 0.87 to 1.20 very fast what it would look like. I think the exact opposite.
On the other hand, do you really believe that the increase from 0.85 to 1.60 was not manipulated?
I liked your chart very much. I wonder if you looked at the chart in 2002 when the Euro went from 0.87 to 1.20 very fast what it would look like. I think the exact opposite.
On the other hand, do you really believe that the increase from 0.85 to 1.60 was not manipulated?
Manipulation is the name of the game but it has its own limitation. It’s identified by its short life span before it reverses its own course. Those who lose their patience lose their shirts. Looking at long term trends with no fundamental changes in market’s economy helps identify traps. This summer oil prices is a good example. As far as the US, its weak economy cannot sustain a strong dollar since the dollar is no longer its main export. Its economic outlook suggests it needs to bite the bullet and live with a weak dollar. The way I look at it, it’s in my best interest to borrow a strong dollar but when time comes for me to pay it back, I want it to be smaller. The US mushrooming debt is the dollars disease. As far as Europe, they don’t have elections coming up. They don’t have a gas guzzling war. They are honest and transparent about their economy. And for the time being, they are recharging their batteries with low energy prices and competitive euro/exports that will help them take off within a few months. That is a problem for China which is the main dollar manipulator, and it will be acting accordingly.
8th September 2008
