Anyone got a handle on why the USD is declining?

[ShokWaveRider]

I have noticed that the USD has dipped drastically recently against some of the major world currencies. Do we know why?

Euro, Pound and CAD are the main ones I watch.

 

[Senator]

I have noticed that the USD has dipped drastically recently against some of the major world currencies. Do we know why?

Euro, Pound and CAD are the main ones I watch.

Probably because it was up for so long, it was time for a correction. I recent upped my international exposure, around the January timeframe.

 

[NgineER]

Monetary policy in the EU and political gridlock in the US is my take on it.

 

[ShokWaveRider]

In particular the Canadian Dollar has gone from 1.40 to 1.25, that is a significant drop in the Dollar.

 

[RetireAge50]

The reason is because I will soon be going to Europe for a month. [emoji51][emoji51]

 

[marko]

The reason is because I will soon be going to Europe for a month. [emoji51][emoji51]

USD is about 1.18 right now. When we lived there it was 1.25-1.3. Be happy.

 

[Koogie]

In particular the Canadian Dollar has gone from 1.40 to 1.25, that is a significant drop in the Dollar.

The central bank here finally started raising interest rates again after not doing so since Julius Caesar was on the throne.

Not a lot of an increase but combined with market sentiment and outside influences it seems to have pushed it up quickly in a short period.

 

[NW-Bound]

One time when we were in Europe, the euro was more than 1.4 USD. It was in 2007, if I recall correctly. It was tough, but life is short, and the wanderlust is strong.

 

[OldShooter]

Short term fluctuations in FOREX are like short term fluctuations in the stock market. They attract many plausible explanations, none of which are verifiable.

In the long game, my opinion is that the dollar will decline.

It is held up right now because it is the world's reserve currency. That is not because it has much intrinsic merit (given our debt % of GDP) but because there are no real alternatives. The yuan is out because nobody trusts the Chinese. The ruble is out due to self-inflicted wounds. The Euro is out due to the Brexit turmoil and the economic problems of southern Europe. ... So the dollar's distinction is that it is the tallest midget.

Most of the rest of the world hates having the dollar as the reserve currency. One major reason is that our banking power can be and is used as a political tool to punish people we don't like.

A weaker dollar will create painful inflation as imports become more expensive but we will effectively be getting a discount on our debts by paying in cheaper dollars and our export products will become cheaper/more attractive overseas. Oh, and those of us with international investments will see our dollar net worth grow.

Will I live long enough to see this happen? I have no idea.

 

[W2R]

I have noticed that the USD has dipped drastically recently against some of the major world currencies. Do we know why?

Probably because it was up for so long, it was time for a correction. I recent upped my international exposure, around the January timeframe.

+1

One time when we were in Europe, the euro was more than 1.4 USD. It was in 2007, if I recall correctly. It was tough, but life is short, and the wanderlust is strong.

+1
Exchange rates go up and down. It's a fact of life.

I remember quite clearly when you could get 360 yen to the dollar. That was quite some time ago, more than half a century. Now you can only get 110 yen for a dollar. And look at how much the yen has varied in comparison with the dollar, just in the past year! (graph below)

ShokWaveRider, perhaps all this is befuddling to you, and you are asking "OMG!! Why is that? How can that possibly be?" Answer? This is the way of the world, always has been. This is something with which most savvy international travelers are quite familiar. Exchange rates vary from time to time.

 

[Blue Collar Guy]

The reason is because I will soon be going to Europe for a month. [emoji51][emoji51]

Hahahah, we have similar luck

 

[Blue Collar Guy]

This is why I like the Lira, you always got 1000's per dollar, Seemed like a lot

 

[braumeister]

I always come home from trips with a small stash of bills and coins. I like to have them so I don't have to worry about finding an ATM at the airport on my next trip.

YTD my "basket of currencies" has appreciated nearly 6% against the dollar. Some years it goes the other way, but it's not a big deal either way.

 

[6miths]

In Europe now and just be happy that you aren't paid in GBP and spending significant time on the mainland. The GBP has gone from 1.45 to 1.09 in under two years. The CAD went from 1.02 to just above 70 cents over 3 years before rebounding recently. I agree with the answer that the USD has probably been a bit overvalued and was due for a bit of a fall.

 

[Bestwifeever]

The reason is because I will soon be going to Europe for a month. [emoji51][emoji51]

Pretty sure we caused it during our trip the last ten days....

 

[dallas27]

Expansionary policy elsewhere plus higher growth rates expected elsewhere. Thats also why the major rotation from US to foreign equities is happening. I'm concerned the US may be looking a lot like japan stuck in a low growth rut if we can't figure out a way to spur productivity and wage growth.

 

[Bir48die]

Short term fluctuations in FOREX are like short term fluctuations in the stock market. They attract many plausible explanations, none of which are verifiable.

In the long game, my opinion is that the dollar will decline.

It is held up right now because it is the world's reserve currency. That is not because it has much intrinsic merit (given our debt % of GDP) but because there are no real alternatives. The yuan is out because nobody trusts the Chinese. The ruble is out due to self-inflicted wounds. The Euro is out due to the Brexit turmoil and the economic problems of southern Europe. ... So the dollar's distinction is that it is the tallest midget.

Most of the rest of the world hates having the dollar as the reserve currency. One major reason is that our banking power can be and is used as a political tool to punish people we don't like.

A weaker dollar will create painful inflation as imports become more expensive but we will effectively be getting a discount on our debts by paying in cheaper dollars and our export products will become cheaper/more attractive overseas. Oh, and those of us with international investments will see our dollar net worth grow.

Will I live long enough to see this happen? I have no idea.

+1

The dollar is crazy enough is a better option than anywhere else. When I started doing business in Canada the exchange rate was $.63. In 2011 it was par. It's tough to figure out how to make money when currencies fluctuate like that.

I think somehow we've forgotten that we are still $8 gazillion in debt but that seems to be ok.

 

[Curmudgeon]

The dollar went way up with Trump's election and his promises to MAGA (as shown by the graph W2R posted), and now that the 'honeymoon' is over it's just settling a bit closer to its pre-election value.

 

[imoldernu]

Trade Weighted US Dollar Index

Wondering how you see the US Dollar Index.
Simple explanation?

I confess to not understanding this, and wonder about the effect on the economy, if any, either long term or short term.

Thoughts? Links?

How do technology advances and advanced manufacturing processes affect this, particularly in comparison to less developed countries.

 

[MichaelB]

Wondering how you see the US Dollar Index.
Simple explanation?

I confess to not understanding this, and wonder about the effect on the economy, if any, either long term or short term.

Thoughts? Links?

How do technology advances and advanced manufacturing processes affect this, particularly in comparison to less developed countries.

There's a discussion on the US$ underway, so the threads were merged.

Here's a chart from the St Louis Fed which shows the value of the US$ over 20 years. https://fred.stlouisfed.org/series/TWEXB

Edit to add - the US$ is still close to it's high over that 20 year period.

 

[VFK57]

Could be a currency war (cheapen your currency to invite more business) or less US$ world demand due to China, Russia and their trade partners do not use US$ in their trade anymore.

 

[Koogie]

+1

The dollar is crazy enough is a better option than anywhere else. When I started doing business in Canada the exchange rate was $.63. In 2011 it was par. It's tough to figure out how to make money when currencies fluctuate like that.

I think somehow we've forgotten that we are still $8 gazillion in debt but that seems to be ok.

Tell me about it. I have a business in Canada but earn the majority of my revenue in USD. I've seen it whipsaw by over 50 points in the 14 years I've been in business. I don't even pretend to know where it is going to go anymore.

Don't forget every other single Western nation is also pickled in debt.

One thing that is a positive for the USD is that when/if there is a crash, a lot of that money flees out of the market and into cash. Generally the USD.

 

[iloveyoga]

Monetary policy in the EU and political gridlock in the US is my take on it.

+1

 

[sengsational]

I always come home from trips with a small stash of bills and coins. I like to have them so I don't have to worry about finding an ATM at the airport on my next trip.

My stash is too small to really buy anything, but I keep it in the easiest-to-access pouch on my suitcase...that way, I know right away if someone with bad intent has rifled through my stuff and taken something (they thought) had value.

 

[Blue Collar Guy]

Maybe its Bitcoins fault?