Which way is the Dollar going?

scottbombedout · 03-15-2009, 02:13 PM

The Pound is worth 1.39 Dollars.

I have a big purchase I want to make in Dollars but it will be too painful at that rate

Which way is the exchange rate going? and how long will it take?
After all, your economy is supposed to be worse than the UK, so surely the Dollar should be worth less against the pound and not more?

Can someone edumacate me?

red-beard · red-beard's Garage

The Mexican Peso gained on the USD in the last couple if days.

Here is the data on the GBP vs the USD

The trend is for the dollar to be on par with the pound in 3-4 months! Not that I believe that...

Actually, it does appear to be flattening a bit

This is quite scary for you, though! GBP vs. the EURO

scottbombedout · 03-15-2009, 02:27 PM

The euro at parity is scarey, but I think in the UK we have resigned ourselves to that happening.

The Dollar at parity is not a nice thought.

red-beard · red-beard's Garage

Maybe we should buy you guys out, while the Pound is low. The only thing, we're gonna have to make you guys accept our Constitution. The good news, you get to have your guns back!

Oh, and you'll have to go back to Imperial units, except for "stones".

Porsche-O-Phile · Porsche-O-Phile's Garage

Short-term, up. Intermediate to long-term, down. WAY down.

ruf-porsche · ruf-porsche's Garage

Quote:

Originally Posted by red-beard

Maybe we should buy you guys out, while the Pound is low. The only thing, we're gonna have to make you guys accept our Constitution. The good news, you get to have your guns back!

Oh, and you'll have to go back to Imperial units, except for "stones".

And you will have to learn how to drive on the "Right" side of the road.

LOL

Dottore · 03-15-2009, 06:01 PM

The issue isn't the dollar. It's the pound that's taking a massive dump.

Porsche-O-Phile · Porsche-O-Phile's Garage

Pretty much all western currencies are taking a dump right now, although I believe the magnitude and depth of the dump the dollar will take long-term will outpace that of the others (including the Euro or pound). Net effect is that the dollar will weaken relative to them.

I simply don't see how we can't keep printing Monopoly money by the trillions of dollars and not tremendously de-value our currency. Impossible.

I've pointed this out elsewhere, but there are also a lot of incentives for the government to DELIBERATELY try to weaken the dollar and devalue it too - not the least of which is being able to "offset" today's borrowing with nearly-worthless dollars tomorrow. On paper, it balances. The reality is they can pay off the debt for pennies on the dollar in terms of real value.

There's also the effect of "recovering" housing prices. The average schlub out there will only see that their place is "worth what they paid for it a few years ago" and ergo "all is right with the world again". Makes for a damn nice/convenient political self-congratulatory talking point, doesn't it?

Dottore · 03-15-2009, 06:16 PM

Quote:

Originally Posted by Porsche-O-Phile

I believe the magnitude and depth of the dump the dollar will take long-term will outpace that of the others (including the Euro or pound). Net effect is that the dollar will weaken relative to them.

Are you aware that USD has been one of the strongest currencies to be in for the past few months?

Porsche-O-Phile · Porsche-O-Phile's Garage

Yes - but I believe it's all relative. I figure it'll continue upwards for a time until all the effects of the trillions of dollars of "play money" entering the system become apparent.

tabs · 03-15-2009, 06:23 PM

It isn't strong because of anything America has done...it is because the others are so bad that they have declined.

All we have done is upped the spending.

red-beard · red-beard's Garage

The Chinese have a trillion reasons that the dollar shouldn't de-value.

But if we try, they will dump what they have, and drive the dollar into the ground, to spite us.

Dueller · 03-15-2009, 07:40 PM

It will fluctuate.

Hugh R · 03-15-2009, 07:43 PM

Two years ago in London, I noticed that they have a 1 pound (as in currency) menu that was the exact same as the $1 menu in the US for the exact same thing. I don't see how people live in London. $600/night for a hotel room that was about the size of my master bathroom. Sheesh!

Porsche-O-Phile · Porsche-O-Phile's Garage

Quote:

Originally Posted by red-beard

The Chinese have a trillion reasons that the dollar shouldn't de-value.

But if we try, they will dump what they have, and drive the dollar into the ground, to spite us.

Agreed.

They've got us very much over a barrel right now. Might be a very, very good time for Beijing to start rattling the saber with Taiwan...

jyl · jyl's Garage

Interestingly enough, not only is USD appreciating relative to other currencies but it is appreciating relative to most assets - property, stocks, most commodities, many types of goods (hence inflation is virtually zero, if not negative), etc.

This isn't anything to celebrate, as it reflects how weak global economies are.

The big bugaboo is "what if the Chinese stop buying treasuries". Some argue that the Chinese have no realistic alternative to buy, which I think is right. They are as dependent on the US economy as we are. But I'd like to see an analysis that convinces me the Chinese will have enough ability to buy.

Porsche-O-Phile · Porsche-O-Phile's Garage

Inflation is a tinderbox right now. Yes, it's being kept in check by a seriously deflating economy for now, but I have a hard time believing this can stave it off forever. Eventually things are going to either hit bottom or start to turn around. When they do, there's a LOT of pressure on inflation to skyrocket. It could jump very quickly followed by the predictable actions of the Fed (as in the 1970s) to push interest rates extremely high, which could in turn quash a recovery, which would prompt the government to infuse more money, which would put more upward pressure on inflation... (see the cycle?)

Interesting times - I don't know for sure how this is going to play out, but inflationary pressure is the 900-pound gorilla in the room nobody's talking about just yet. You don't just chuck 3 or 4 trillion bucks into circulation with no inflationary ramifications...