06-26-2009, 01:48 AM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by CFANerd</i>
<br />Can anyone forecast the value of US dollar in coming months? Remember it can just be a forecast, forecasts can be wrong so feel free to share your views.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
It depends on the currency you are comparing the US Dollar with. I think the best comparison would be with the basket of currencies rather than just one.
As a result of the current financial storm, the US government (along with a number of other Western governments) had to provide fiscal and monetary stimulus and also to effectively print money (through a process called quantitative easing). As a result of this, the level of US government debt has increased and this would have a negative impact on the US Dollar. But, like the US government, other Western governments, such as UK and Europe, also had similar financial problems have resulted in higher levels of national debt. So, it is not very clear what and if there will be any impact on the USD. I think USD/GBP is close to its fair value. USD was very weak versus GBP before the crisis but then flight to quality helped the dollar and it got over bought. Recently, as the financial storm has slowed down, dollar has weakened as risk appetite has increased somewhat.
Overall, I think as long as sovereign wealth funds and central banks continue to hold US dollar and US dollar denominated assets, US dollar will have a healthy future.
DT
<br />Can anyone forecast the value of US dollar in coming months? Remember it can just be a forecast, forecasts can be wrong so feel free to share your views.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
It depends on the currency you are comparing the US Dollar with. I think the best comparison would be with the basket of currencies rather than just one.
As a result of the current financial storm, the US government (along with a number of other Western governments) had to provide fiscal and monetary stimulus and also to effectively print money (through a process called quantitative easing). As a result of this, the level of US government debt has increased and this would have a negative impact on the US Dollar. But, like the US government, other Western governments, such as UK and Europe, also had similar financial problems have resulted in higher levels of national debt. So, it is not very clear what and if there will be any impact on the USD. I think USD/GBP is close to its fair value. USD was very weak versus GBP before the crisis but then flight to quality helped the dollar and it got over bought. Recently, as the financial storm has slowed down, dollar has weakened as risk appetite has increased somewhat.
Overall, I think as long as sovereign wealth funds and central banks continue to hold US dollar and US dollar denominated assets, US dollar will have a healthy future.
DT
