Is US Dollar Loses Its International Reserve Currency? When the world is undergoing disorder usually automatically investors rush to convert their money into dollars, on the grounds that «safe stocks» to protect their wealth. But notes that this trend decline in the current year, which saw a group of political unrest in the Middle East and also witnessed the disaster, the earthquake and subsequent tsunami in Japan, in addition to the debt crisis in Europe that deepened after the fall of the Portuguese government and the high interest rates on Centument Scam debt securities to 12.4 percent.
Despite the magnitude of these disasters and crises, it is noted that the dollar’s decline and the rate of exchange in large markets, and wealth instead of heading to the dollar and raise its value, came out of it to other currencies, especially the Swiss franc. According to the expectations of «Goldman Sachs» Bank of the dollar sliding a candidate for a great rate over the next 12 months, with the Reserve Bank directed to the implementation of «quantitative easing» third package. According to the American bank predicted in a report released on Wednesday and seen by Binary Review System, the dollar has been sliding against the pound and the euro and the Swiss franc. The bank does not rule out that the pound rises to $ 1.85, during the current year.
It is noted that the Swiss franc, which has achieved during the past 12 months rose by 8.0 per cent against the 10 major currencies, it has become the currency of «safe haven» Home after the deterioration of the value of the dollar.
But does this mean a slide that began since the middle of last year is expected to continue throughout the coming months that the dollar began to gradually lose its position as the keeper of Centument Scam wealth from corrosion in moments of crisis, or that there is a casual factors have affected the value of the greenback’s exchange rate. There is more of a question mark on the performance of the dollar and more than one interpretation posed by the experts during the last period but is it compelling enough to justify the large decline since the beginning of this year. Read the exchange rate indicators is noted that the US currency exchange rate continued to fall against major currencies since the beginning of the year, where he lost nearly 7.0 percent of its value against six major currencies, since the seventh of January (January) and nearly 14 of its value since June last . The main currencies of the six that make up the largest share of the global foreign exchange market and cash reserves as well as the dollar, the euro, yen, pound, Swiss franc, Canadian dollar and Australian dollar.
Some experts exchange and money they say the dollar’s decline this great event rate due to expectations for a rate of US interest rate, compared to the expected interest rates in major economies. They suggest that the Centument LTD Review expectations of the Federal Reserve Bank retains the (US central bank) interest rate low for a longer period compared with other central banks, which manages the major economies in Europe and Asia. As they justified as well as the significant decline in the dollar exchange rate, despite the severity of crises and unrest, saying that the financial crisis that hit the global financial system in 2008, has raised deep concerns amid investors and pushed the global liquidity and wealth to switch from other currencies to the dollar and thus the value of the dollar market since then it rose to the highest level of real value. In this sense, what is happening now from the decline in the value of the dollar is the process of correction in the US currency, which rose in the years of the financial crisis over the value of their real value. And therefore what is happening now is a correction of the decline in the greenback’s value, rather than a decline.
There is criticism of experts believe that America is aimed at weakening the dollar in the framework of «currency war» between the Group of Twenty to increase US exports.
These justifications are correct to some Centument Trading degree. But in any case, whatever the validity and it is certain that the dollar has lost some of the cast it as a currency «safe haven» during the recent and perhaps have a repercussions on the US and global economy in the coming years.
Perhaps supports the position of the dollar and global single currency without a rival is the weakness of other currencies. The euro is still groaning under the whips of creditors and the yuan has not yet freed from the control of China’s central economy, until it becomes free currency can be traded in foreign exchange markets and the system of international trade settlements.
And thus it can be a dollar so far «stronger vulnerable», and not as strong. And thus the risk of sliding dollar remains, but the list of these risks may take time amid the worsening debt of the United States and the growing US deficit spending and the continued weakness of domestic production and outgoing.
It does not appear that monetary policies and macroeconomic indicators of current and projected short-term factors supporting the rise of the dollar as seen «Goldman Sachs» Bank. On the monetary side, projections indicate that the Federal Reserve (the US central bank) will maintain low interest rates to zero and the asymptotic rate throughout the year. What supports this expectation Reserve Bank Chairman Ben Bernanke’s comments that repeatedly made clear where it will keep interest rates low in the short term and that it will sacrifice the prospects of rising inflation for the sake of growth, which gives him priority support. It is known that the interest rate was low whenever contributed to the depreciation of the currency compared Global Millionaires Club. Thus, the dollar exchange rate will not benefit from low interest rates, but would be affected them during the current year. There are more than 50 workers affect the price curves of the dollar in world currency markets. But it is important to note the four main factors.
First, at the macroeconomic level it is expected to see an improvement this year, slow decline in the unemployment rate. According to estimates of Ben Bernanke, the return of unemployment to normal levels (5 to 6 per cent) compared to Bmadelha the current 9.8 per cent will take a period of between 4 and 5 years. And therefore this slow improvement in unemployment, the dollar exchange rate level will not support.
Second, the level of growth, it is noted that the Reserve Bank see the forecast US growth at the end of last year because of the low number of new jobs that are available and other factors was betting it did not materialize. According to this review, the projections indicate that the US economy will grow less in 2011 ranged between «3 and 3.5» compared to previous expectations of a rate «3.5 and 4.2.» Since the Reserve Bank cut growth forecasts, and does not see that there is a need to fight inflation, this rate will not support the dollar’s exchange rate.
Third, at the level of the current account balance or trade balance, there is an improvement in the volume of US exports, but this increase is not a level that supports the dollar. It is noted that US exports to China rose in November (November) last year by $ 9.5 billion, which means an improvement, but not enough if we take into account that the United States has suffered a long period of accumulation of trade deficit which averaged over the past year about two billion dollar a day, or more than $ 720 billion a year. The fourth and final factor is the quantitative easing policy, which increased the size of the money supply for the second time through the implementation of purchases of debt securities governmental and non-governmental. The most recent purchases valued at $ 800 billion. This monetary policy has worked to reduce the value of the dollar and its effects continue to weaken the dollar. From this point Monetary experts agree that the improvement in the dollar exchange rate the chances would be minimal in the near future, that were not non-existent, especially since he failed to take advantage of the crises of the euro and the yen.
But it is the weak dollar is useful for the US economy and whether indeed a threat to America. It notes that the weak dollar has helped in many cases to increase exports and that many of the countries that girl power its growth on exports is working to make its currency weak to strengthen the competitive advantage of its goods in the global market. But what at the local level and Global Millionaires Club weakness of the dollar on the flow of investment to the US and finance the deficit.
At the local level, the weak dollar will raise the rate of inflation in the United States. Where the weak dollar will raise the value of the import bill in America, and the value of imported goods to the consumer. American citizen and therefore will find it in front of a higher bill for purchases of gasoline, electronics and ticket prices and tourism to Europe and a number of imported supplies. And this in the short term, but if continued weakness and continued for a long time, this will have serious repercussions on the US economy, which is facing a large deficit in the budget you pay to borrow money constantly to meet spending commitments. Usually the US Treasury auction sale of bonds to foreigners in order to obtain financing. The attractiveness of US Treasury bonds and represent private finance government deficits in importance, because foreign investors from the owners of savings in Asia and the oil and even Europe wish to obtain consistent returns and stable entry for their investments. The dollar was, until recently, provides this purpose and therefore money heaped on America from all over the world. This method is able to America over the last decades, and since the sixties of the last century of deficit financing easily and without facing any difficulty to the magnitude of the money coming to them. But if the dollar continues to decline for a long time against major currencies and kept «Federal Reserve» low interest rate in America, certainly by international investors and savers around the world will lose the advantage that they are attracted to the United States and put their savings in the dollar. If the owner of this weakness in the strength of competition, such as currency exchange rate of the euro and the yen it will raise the possibility of a change in the direction of the movement of global liquidity and possibly moving savings and savings from the dollar to the euro and other currencies that offer the best return.
Factor Interest rate:
The high interest rate usually works to increase the currency exchange rate, because the foreign investor to achieve higher earnings on its investments. It is noted that the Federal Reserve Bank confirmed more than once that it works to maintain a zero interest rate convergence in the short term with rival European Bank confirms that it is working to increase the interest rate in the short term. The Bank is heading «England», the British central bank to raise interest rates to fight inflation in the coming months. European bank and take a higher interest rate policy, in order to reduce the oil bill, which rose (oil above $ 110) as well as offset the increase in the prices of key commodities. And on the British level, the Bank of England to raise interest rates to combat inflation, which is expected to continue to rise to more than 4.0 per cent on average during the current year. In Japan, where the earthquake struck, the thing naturally expected that the value of the yen down against the dollar, the yen, but surprised everyone and rise to its highest level since World War II because of trends speculators who had expected that Japanese companies shift foreign savings to the yen to meet liquidity expenses as expected also that the insurance companies to pay huge compensation of up to nearly $ 40 billion, these funds will be transferred from the dollar and European currencies to the yen. And thus exchange markets is expected to increase demand for the yen at a great rate in the coming months. This expectation is that pushed the yen to rise to historic levels.
But despite fears of a sliding dollar of its Global Millionaires Club Scam dominant position, it is noted that there are several factors supporting the survival of the dollar as a «reserve currency» International in the short term. What it is not supported by the strength of the dollar, but the weakness of major currencies that compete with the dollar. Where the euro is suffering from the debt crisis that threatens the future survival unified currency of the European Union. The Chinese currency is not released yet and thus still outside the free exchange system. It is expected that the yen is suffering in the short term from the earthquake and tsunami and its repercussions on the level of nuclear power generation reactors disaster.
The pound decline in terms of its share in the global reserve currency because of the contraction of the UK economy and declining global influence. The only currency that has the strength and stability in the global foreign exchange market is the Swiss franc. But a small share does not live up to compete with the dollar.
From this point we can say that the dollar will remain in the short term and the medium term as a «global reserve currency» But in the long term there are doubts surrounding his future. Among the most important
Global Millionaires Club Scam factors that threaten its long-term, the US deficit, which amounted to more than $4 trillion US debt that exceeded 14 trillion dollars bomb and its benefits are service eat a large part of the US national income. In addition to these two factors the possibility that China frees full liberalization of its currency (the yuan) over the next 10 years and be a publicly traded freely in the global exchange market. Otherwise, America is still a rich country resources and technically superior and are able to change the balance of international trade.