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Weak Dollar - Any Concerns
Old 04-18-2007, 06:37 AM   #1
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Weak Dollar - Any Concerns

US Dollar seems to be taking a slide against other currencies recently, especially the Pound and Euro in the last couple of days. I know the UK are looking at raising interest rates soon. I heard this morning a discussion of stagflation in US.

Any thoughts, concerns?? Or am I just getting the close to FIRE jitters?
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 06:55 AM   #2
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Re: Weak Dollar - Any Concerns

It will get weaker once the Fed begins to lower interest rates.

The question is how will it affect your int'l travel - it will be more expensive.

US stock market - could go up as our stocks look cheap to foreign investors; it could go down if foreign investors see their currently invested dollars going down. So far it isn't in the news so not too much to worry about.
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 07:31 AM   #3
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Re: Weak Dollar - Any Concerns

Meh, own some foreign bonds and stocks and stop caring.
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 11:16 AM   #4
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Re: Weak Dollar - Any Concerns

Thanks for the comments,

Now I'll try to stop worrying and go play some games
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 12:06 PM   #5
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Re: Weak Dollar - Any Concerns

Yeah, I'm concerned.
I like to go to Europe and the weakening dollar certainly has a negative effect
on travel to the UK and the Euro countries.
What can the US do about strengthing the dollar or doesn't anyone care ?
.
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 12:34 PM   #6
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Re: Weak Dollar - Any Concerns

A weaker dollar means that we are poorer.

Quote:
Originally Posted by bennevis
What can the US do about strengthing the dollar or doesn't anyone care ?
We can quit buying stuff made in foreign countries. We can raise interest rates. We can quit borrowing money to balance the federal deficit.

The choices aren't too attractive.

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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 12:48 PM   #7
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Re: Weak Dollar - Any Concerns

Quote:
Originally Posted by F-One
US Dollar seems to be taking a slide against other currencies recently, especially the Pound and Euro in the last couple of days. I know the UK are looking at raising interest rates soon. I heard this morning a discussion of stagflation in US.

Any thoughts, concerns?? Or am I just getting the close to FIRE jitters?
I want to retire to the UK, I'm freeking out even with 40% of my assets in international stocks/bonds
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 01:06 PM   #8
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Re: Weak Dollar - Any Concerns

Quote:
Originally Posted by Masterblaster
A weaker dollar means that we are poorer.

We can quit buying stuff made in foreign countries. We can raise interest rates. We can quit borrowing money to balance the federal deficit.

The choices aren't too attractive.

It depends on how you spin it; Now american companies can export more. Imports face more competition from local manufacturers;
Check this out:


http://bp0.blogger.com/_1eBdIBhrMwI/...01_077_003.jpg
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 01:19 PM   #9
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Re: Weak Dollar - Any Concerns

currencies go in cycles along with the economy

back around 2002 everyone was in a panic that the dollar was so low and no one remembers it anymore.

stagflation is a real possibility but so are a lot of other things
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 02:36 PM   #10
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Re: Weak Dollar - Any Concerns

Quote:
Originally Posted by lswswein
It depends on how you spin it; Now american companies can export more. Imports face more competition from local manufacturers;
Well that great for them. As for me I really don't sell too much overseas so I don't get any boost from that. However I do buy quite a bit that is imported. So the price of the stuff I buy just goes up.

The spin that other countries can cherry-pick our stuff now doesn't seem like too great of a trade off.

However you spin it, we are poorer now.
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 03:12 PM   #11
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Re: Weak Dollar - Any Concerns

Quote:
Originally Posted by F-One
US Dollar seems to be taking a slide against other currencies recently, especially the Pound and Euro in the last couple of days. I know the UK are looking at raising interest rates soon. I heard this morning a discussion of stagflation in US.

Any thoughts, concerns?? Or am I just getting the close to FIRE jitters?
I agree with you. Living abroad, I can really relate to the currency swings. I learned a long time ago that a weak US $ makes me poorer... (in the USA it shows up as inflation)

Yes all curriencies have their day, but I do not see the Pound Sterling weakening significantly against the USD any time soon. (trade/budget references)

Lance
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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 03:23 PM   #12
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Re: Weak Dollar - Any Concerns

It's great for tourist areas like Florida or other hot travel destinations. Lot's more Europeans will be vacationing and spending lots of money at hotels, restaurants, retail shops, etc. A lot of people are going to make a ton of cash. May be good for certain real estate markets too as Europeans buy up vacation homes. They will spend more on American products which will be a bargain for them. So it's not all doom and gloom for everyone.

True enough though, if you want to travel around Western Europe, it's gonna cost ya. Eastern Europe is still quite the bargain though

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Re: Weak Dollar - Any Concerns
Old 04-18-2007, 07:14 PM   #13
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Re: Weak Dollar - Any Concerns

For those of us who are going to Europe this summer, the decline of the dollar hurts.

In typical LYBM fashion, however, I've found "funding sources" for most of my travel expenses. My wife's, though, will be from my pocket. (She has FIRE'd.) One of the advantages of being in academia, though, is that one can find small grants here and there.

Once I FIRE (summer 2008), all trips outside North America will be evaluated on how far the U.S. dollar goes.



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Re: Weak Dollar - Any Concerns
Old 04-19-2007, 12:58 PM   #14
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Re: Weak Dollar - Any Concerns

Does anyone have any thoughts about the long-term relationship between the dollar and the Euro? I have read some websites talking about how "this time it is different", that the dollar may never come back again because more and more countries are moving from the dollar to the Euro as their reserve/default currencies.

Do you believe this, or do you think it is just part of the historical cycle where the dollar is currently down but in a few years it will probably be back up again?

My own take is that other than that many countries are moving from the Dollar to the Euro as their reserve/default currency, it seems that Europe has their own problems with deficits (just like the US) and what have you. Therefore, it would perhaps seem that the dollar should come back at some point?

I'm curious on your thoughts. Thanks in advance.
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Re: Weak Dollar - Any Concerns
Old 04-19-2007, 01:59 PM   #15
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Re: Weak Dollar - Any Concerns

7 years ago no one knew how long the euro would last so it was weaker. now that it's not going away it's safe to buy into it.

if i'm wrong then someone correct me, but as i understand it but since currencies are traded in pairs everyone needs to hold an amount of euros in reserve to make their currency worth something against the euro
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Re: Weak Dollar - Any Concerns
Old 04-20-2007, 08:52 PM   #16
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Re: Weak Dollar - Any Concerns

Dollar fall portends economic changes
http://www.businessweek.com/ap/finan.../D8OKLQ2G0.htm

Asian Currencies: Ringgit Rises; Malaysia May Tolerate Gains
http://www.bloomberg.com/apps/news?p...pKQ&refer=asia

It is beginning to get into the main stream news now.
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Re: Weak Dollar - Any Concerns
Old 04-20-2007, 11:11 PM   #17
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Re: Weak Dollar - Any Concerns

Quote:
Originally Posted by george76
Does anyone have any thoughts about the long-term relationship between the dollar and the Euro? I have read some websites talking about how "this time it is different", that the dollar may never come back again because more and more countries are moving from the dollar to the Euro as their reserve/default currencies.

Do you believe this, or do you think it is just part of the historical cycle where the dollar is currently down but in a few years it will probably be back up again?

My own take is that other than that many countries are moving from the Dollar to the Euro as their reserve/default currency, it seems that Europe has their own problems with deficits (just like the US) and what have you. Therefore, it would perhaps seem that the dollar should come back at some point?

I'm curious on your thoughts. Thanks in advance.
I have a few thoughts with respect to $/Euro. Mostly subjective though

A friend reminds me that when the Euro was first introduced, it was priced at 1.20 USD to the Euro. So while the Euro e is now quit strong, around $1.35/USD, it helps to keep the original price in mind.

Also, somewhere ont his forum somebody posted a link to a Citi Group (I think that was the name) article pointing out that most European Nations -with the UK a notable exception- have HUGE public pension liabilities, making our SS problems look small in comparison. Cranking the printing presses up to pay all those retiree obligations might dampen the demand for Euros a bit Every where I travel I see large numbers of Europeans on holiday partly due to the fact that they get 4 to 6 weeks of vacation or that they are retired, usually relatively early. I am not bashing Europeans, but my point o is that all that time off does tend to take a bite out of efficiency, which, at some point will show up in the demand for Euros IMHO.

I complain about the long term trade and budget deficets, but some of our competitors have their own problems as well.

Just my take on take on things...

Lance



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Re: Weak Dollar - Any Concerns
Old 04-20-2007, 11:46 PM   #18
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Re: Weak Dollar - Any Concerns

Quote:
Originally Posted by brewer12345
Meh, own some foreign bonds and stocks and stop caring.
That pretty much sums up my feelings about it.
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Re: Weak Dollar - Any Concerns
Old 04-21-2007, 10:13 AM   #19
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Re: Weak Dollar - Any Concerns

Quote:
Originally Posted by F-One
I heard this morning a discussion of stagflation in US.
Y-O-Y CPI of 2.8% and real GDP growth ~2.5% is hardly stagflation. I know financial writers need something to print, but jeesh.

The only thing that peeves me is my international travel budget doesn't buy what it used too.
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Re: Weak Dollar - Any Concerns
Old 04-21-2007, 05:16 PM   #20
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Re: Weak Dollar - Any Concerns

We're going to Europe in a few weeks. I keep reminding myself that with about 20% in international stocks in recent years I've more then hedged against the steep prices I'm going to see.

Here are a few graphs of the dollar to give you some perspective:
long term: http://research.stlouisfed.org/fred2...s/TWEXMTHY/105
more recent: http://research.stlouisfed.org/fred2...DTWEXB/105/Max

Les
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