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Euro vs Dollar Exchange Rate: An Historic Event?
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Re: Multicultural Cash
  • 7/26/2015 8:35:37 PM
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Today I learned!

Re: Multicultural Cash
  • 4/16/2015 7:34:14 AM
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..

CandidoNick writes


The Euro has to battle with the multiple successful and, more notably, unsuccessful economies under its wing. I doubt we can attribute this "historic event" to the build up of the USD, but more to the bogging down from Greece and Italy, etc.


 

Liberal Keynesian economist Paul Krugman discussed the weak euro/strong dollar issue in his New York Times column not long ago. Here's an interesting bit:


Even before the new Greek crisis blew up, Europe was starting to resemble Japan without the social cohesion: within the eurozone, the working-age population is shrinking, investment is weak and much of the region is flirting with deflation. Markets have responded to those poor prospects by pushing interest rates incredibly low. In fact, many European bonds are now offering negative interest rates.

This remarkable situation makes even those low, low U.S. returns look attractive by comparison. So capital is heading our way, driving the euro down and the dollar up.


 

 

Re: Fickle Euro
  • 4/15/2015 5:35:30 PM
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Interesting how headlines sometimes mislead as to what the real truth is. It was revealing to see how the euro had been to such levels before.  A low euro makes for great vacations values for Americans and reportedly many are taking advantage of "bargain" deals in Europe for hotels, shopping all all that one would do on a vacation there.

Multicultural Cash
  • 3/31/2015 10:15:28 PM
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The Euro has to battle with the multiple successful and, more notably, unsuccessful economies under its wing. I doubt we can attribute this "historic event" to the build up of the USD, but more to the bogging down from Greece and Italy, etc.

Fickle Euro
  • 3/27/2015 10:32:24 AM
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..

I sorta remember the euro being worth less than the dollar some years back, so I probably would have questioned the "historic low" assertion myself ... but then would have just yawned and not bothered with the excellent research, analysis, and visual analytics Robert has done.

To address the economics question ... I'm not an economist either, but need to have some knowledge, enough to be dangerous, in what I actually do. So what I understand is that a strong dollar, by raising the price abroad of U.S. goods/services, tends to make U.S. commercial operations less competitive and to reduce consumer demand (at least the ability to pay) for these U.S. products. (On the flip side, European products, like transit railcars and buses, and German chocolate, could cost less to U.S. consumers, transit agencies, etc.)

However, a stronger dollar should make the USA's "gold bugs" happier (especially politicians like Rand Paul, Rick Perry, etc.). On the other hand, they also have a strong tendency to deny data that doesn't fit their ideological worldview, so they have recently seemed to just reject the dollar vs. euro data as a sinister deception by the Obama administration.

 



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