spiked to new highs of 1.5906 yesterday triggering speculation in the forex market and other global financial institutions of the greenback, (dollar, USD) collapse. Is this trend sustainable to the EUR zone economy?
The greenback has been under immense pressure in the last few months. Since christmas the floor have finally caved in which has brought the dollar to its knees.
At the moment, the US economy is recession. Whether there is an official acknowledgement or not we now know that the numbers prove it. The consumer spending one of the economic prime movers has dried out, fuel price soaring and equity market facing collapse, it is becoming more and more difficult to convince people otherwise.
While these economic mayhems are happening across the pond, the EUR forex has soared to record levels. What does this mean to the average shopper on the street?
Simply put, it means you get abundance of dollars for your EURo on travels and shopping. It terms of replacing what you have spent, your goods and services become more expensive and unattractive for the rest of the world. Industrial nations like Germany, Japan, new power play like China and India would certainly feel the heat. On the flipside, the EURo zone econmy would also benefit because of foreign influx of investments.
The Pounds sterlings has also felt the dollar impasse because of the British economic proclivity to the US. The GBP/JPY, GBP/USD has felt the weight the most. With USD/JPY hitting new lows it does not seam the end is in sight yet. Let’s hope we don’t test the dollar-yen, USD/JPY low of 79.75 of 1995.
However, it would be naive of the euro zone economic financial power brokers to rest on their laurels of the spike because the long-term effect is retarded growths year-on-year. Every developed nation need American market. With the dollar crumbling, inflation will also be soaring in most the developed nations meaning more expense.
With global economic chaos looming, could the rest of the world watch America fall on its knees? Could the World afford it? It may be America’s problem for now, it’s already becoming a global phenomenon. As Melvyn King, Bank of England Governor, succinct expressed, ”When US sneazes the rest of the world catches cold
The greenback has been under immense pressure in the last few months. Since christmas the floor have finally caved in which has brought the dollar to its knees.
At the moment, the US economy is recession. Whether there is an official acknowledgement or not we now know that the numbers prove it. The consumer spending one of the economic prime movers has dried out, fuel price soaring and equity market facing collapse, it is becoming more and more difficult to convince people otherwise.
While these economic mayhems are happening across the pond, the EUR forex has soared to record levels. What does this mean to the average shopper on the street?
Simply put, it means you get abundance of dollars for your EURo on travels and shopping. It terms of replacing what you have spent, your goods and services become more expensive and unattractive for the rest of the world. Industrial nations like Germany, Japan, new power play like China and India would certainly feel the heat. On the flipside, the EURo zone econmy would also benefit because of foreign influx of investments.
The Pounds sterlings has also felt the dollar impasse because of the British economic proclivity to the US. The GBP/JPY, GBP/USD has felt the weight the most. With USD/JPY hitting new lows it does not seam the end is in sight yet. Let’s hope we don’t test the dollar-yen, USD/JPY low of 79.75 of 1995.
However, it would be naive of the euro zone economic financial power brokers to rest on their laurels of the spike because the long-term effect is retarded growths year-on-year. Every developed nation need American market. With the dollar crumbling, inflation will also be soaring in most the developed nations meaning more expense.
With global economic chaos looming, could the rest of the world watch America fall on its knees? Could the World afford it? It may be America’s problem for now, it’s already becoming a global phenomenon. As Melvyn King, Bank of England Governor, succinct expressed, ”When US sneazes the rest of the world catches cold
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