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What are they doing that has made it worth so much compared to our dollar? Between the pound and euro we are falling way behind. What policies can the government adapt to make the dollar stronger internationally? Its not the best feeling to watch other currencies dominate ours.
these rate cuts are also making sure millions of PRIME exotic loan based mortgages don't go into default as well. They are trying hard to keep the other shoe from falling. Everyone is focused on subprime but that aint ish compared to the prime mortgages that could reset even higher this year. Ben is attempting to fight the good fight.
One other factor causing the value of the dollar to keep sliding is the balance of trade. US trade deficit is still very high. In theory with a weak dollar, you would think the trade deficit might drop because the value of US goods for export are priced lower in Euro, Pound or many other currencies. Problem is the US imports so much oil and other manufactured goods that are no longer made here that the trade deficit is still huge. Plus, the price of oil in US dollars has gone way up so that makes things worse. So we have a lot more money to pay out to other countries than we have coming into this country. If you ran a big monthly deficit in your own business or bank account year after year, other people would certainly think the value of your business or account was weak too, right?
The dollar has strengthened considerably against the Euro (approx 20%) and the pound (approx 25%) since the start of the crisis. This reflects the view that the dollar is a safer haven for investors than either the pound or the Euro.
If a currency is freely traded, then it is almost impossible for a government to influence its value. The international forex markets are much stronger than governments. So the value of a currency reflects a number of factors including how safe investors feel it is, overall strength of that economy and the current level of interest rates.
Basically fro waht I have seen foreigners are in fact moving to teh doolar as the economy worsen. Britain is really in worse shape since they are so dependent on government services based on high taxes and fees.
I've done work for one company in the UK for a few years now (it used to be nice because the conversion was almost 2:1 (pound to dollars). It has slipped to about 1.4:1 so basically I've taken a pay cut. So the pound has in fact dropped.
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