Today, Friday, March 07, 2008, the dollar sank to an all time low compared to the yen, euro, and pound. For years there has been a decreasing value of the dollar against foreign monetary units. Partly this is due to the largest job cuts in the past five years. In February about 63,000 jobs were cut by businesses. Employers are starting to pull back due to an uncertain future. On Wednesday the dollar fell from 103.09 yen to 101.99 yen. Currently, it has been at a three year low. The Euro also increased to a record-breaking rise at a set price of $1.5463. Some Europeans are worried about a possible inflation due to the rising euro. European business owners are starting to the see the affects from the U.S. buyers that are now viewing the European goods as expensive. The British pound topped off at $2.0185. This is particularly due to a steady high interest rate set by the banks. Economists are seeing that lower interest rates can help an economy, but will hurt the currency. People are now looking to transfer funds to countries where they can obtain a higher return.
This may be a factor in traveling also. When travelers see that the exchange rates in some of the popular travel destinations, they may turn away to a new destination. I know I would. France seems great, but it takes a lot more saving up to do than visiting somewhere else where the dollar is worth more. This could hurt countries', with a smaller dollar worth, revenue from tourism. I'm not sure exactly how the interest rates affect currency, any help? I see that high interest rates would result in less loans, which would mean less purchasing... I think. Also, any ideas what has happened over the last three years that has created such a record low?
Friday, March 7, 2008
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7 comments:
This is interesting. It's really sad that the dollar has decreased in value as much as it has over the years. I'm not sure what has caused this record low..
The traveling aspect is interesting. If you notice how much cheaper it is for Arne or Pierre to live here than in Germany or France since their currency is worth more than our dollar.
i was talking about this with david gramley and we came to this conclusion... despite exchange rates... everything is more expensive in europe. Foriegn exchange students always buy a bunch of stuff (jeans, clothes, ect) because it is so much cheaper here then there. Yes the dollar is losing value, but it still costs a lot more euros in germany to buy a pair of jeans then it does dollars here in america...
I think because the dollar has decreased so much in value, that a whole bunch of people from foreign countries are going to want to travel here because it will benefit them more as opposed to us traveling to other countries.
This really sucks for me when I go back to Scotland during the summers. Everything there is about the same number pricetag as it is here, but each pound costs about $2 so we're paying double for most things. People don't make higher wages either, so it's hard to understand how people there survive and still have money...I suppose the healthcare plan eliminates some expenses (but thats another story). When my family come here from Scotland, they buy a ton of stuff because it is so much cheaper.
Yes, the falling value of the dollar will make the US a more attractive european tourist destination. American travellers however, will be forced to start visiting more "exotic" locations because it's cheaper for them to do so. France, Germany, and England will become less popular because things will be almost twice as expensive.
this is an interesting article because it shows people just how different the economies around the world are at this time. With such globilization that has taken place, there are still massive fluctuation of simple things that truly effect our daily lives
When you look at the globalization trend, then add in the slowing economy, it just happens (this is Caitlin's original question - why is this happening?). It is not static, and it really can't be static. It is constantly ebbing and flowing, just as the economy moves from prosperity to recession.
Interest rates can change consumer interest in international companies. If interest rates are down here in the US, it could increase cons interest in a different area, or vice versa. And yes, with loans - if interest rates are down, I am more likely to loan out more money (as a bank), but also, depending on interest rates in other countries, I could also loan internationally.
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