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bachanon

A Weak Dollar

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i was at lunch with a friend today. she was discussing the weak dollar after a trip to bermuda this past month. i'm not familiar with reasons why the dollar has become weak. i understand that lower interest rates are a factor. can someone give me a primer on the nature of currency and what, if any, predicament we are in?

thanks in advance.

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i was at lunch with a friend today. she was discussing the weak dollar after a trip to bermuda this past month. i'm not familiar with reasons why the dollar has become weak. i understand that lower interest rates are a factor. can someone give me a primer on the nature of currency and what, if any, predicament we are in?

thanks in advance.

Balance of Trade. In the very long run, the amount that we import equals the amount that we export. A weak dollar is a mechanism by which that function is brought about.

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So one would think. The cheap dollar should help make US exports more competitive, and I believe there has already been some movement in that direction. The risk the US faces is that some Asian economies and oil producers dump dollars headlong rather than be stuck with a devaluing asset, which would worsen the problem for everyone.

As it happens, yesterday at work they were estimating long-term USD/EUR forward exchange rates. The market at this point doesn't seem to be pricing in much strengthening for the dollar, but my own guess is that it will recover faster than expected.

On the positive side, Europeans now view the US as discount shopping heaven. Many people believe that you can pay for the plane fare from the savings by shopping in America.

In the very long run, the amount that we import equals the amount that we export.

Wrong, you're ignoring capital flows and the value of services.

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As it happens, yesterday at work they were estimating long-term USD/EUR forward exchange rates. The market at this point doesn't seem to be pricing in much strengthening for the dollar, but my own guess is that it will recover faster than expected.

On the positive side, Europeans now view the US as discount shopping heaven. Many people believe that you can pay for the plane fare from the savings by shopping in America.

This is very true, a considerable amount of my overseas clients on business will only bring enough clothing for a couple of days and buy the rest almost as soon as they're able to. For those with extended stays they're particularly thrilled because they can live like kings, head over to the outlet malls and buy half the place up. The only problem I have to remind them of is that they have to get them past customs. MOST are aware of this and take proper steps to avoid the tax, others I usually have to give hints.

One poor soul purchased *10 complete sets* of high end golf clubs for friends and family before he realized he can't get away with all of them. For those that are curious, he was from Scotland, how's THAT for racial stereotyping?

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Please don't speculate. That is the reason why the dollar is weakening (note, it isn't WEAK, it is just weaker) and oil is going to hit $100 a barrel. Because analysts speculate and cause unwarranted panic.

If analysts would shut their traps, things would be fine.

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I just got back from Dublin, Ireland and definitely felt the weak dollar. It was expensive. I met a girl who is begging me to ship her some things from here, she was discussing this whole topic in depth. Very interesting city in terms of the economy. I talked to a lot of people, particularly cab drivers about it:) Almost the whole population of the city is like an average age of 30. It was so young, it was crazy. Companies are locating there and recruiting yound people from all over the world. Every business (particularly restaurants and pubs of course) are busy at all times. Most of the older people I talked to said they bought a house like 12 years ago or around that time frame for around 30,000 to 40,000 pounds (former currency before switch to euro). Their homes are now worth 850,000 to 1.something million! This is very notable. Just thought I would share.

So one would think. The cheap dollar should help make US exports more competitive, and I believe there has already been some movement in that direction. The risk the US faces is that some Asian economies and oil producers dump dollars headlong rather than be stuck with a devaluing asset, which would worsen the problem for everyone.

As it happens, yesterday at work they were estimating long-term USD/EUR forward exchange rates. The market at this point doesn't seem to be pricing in much strengthening for the dollar, but my own guess is that it will recover faster than expected.

On the positive side, Europeans now view the US as discount shopping heaven. Many people believe that you can pay for the plane fare from the savings by shopping in America.

Wrong, you're ignoring capital flows and the value of services.

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I just got back from Dublin, Ireland and definitely felt the weak dollar. It was expensive. I met a girl who is begging me to ship her some things from here, she was discussing this whole topic in depth. Very interesting city in terms of the economy. I talked to a lot of people, particularly cab drivers about it:) Almost the whole population of the city is like an average age of 30. It was so young, it was crazy. Companies are locating there and recruiting yound people from all over the world. Every business (particularly restaurants and pubs of course) are busy at all times. Most of the older people I talked to said they bought a house like 12 years ago or around that time frame for around 30,000 to 40,000 pounds (former currency before switch to euro). Their homes are now worth 850,000 to 1.something million! This is very notable. Just thought I would share.

All very true, but housing prices supposedly have peaked and are beginning to drop. Europe's boomtown, no doubt.

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This is very true, a considerable amount of my overseas clients on business will only bring enough clothing for a couple of days and buy the rest almost as soon as they're able to. For those with extended stays they're particularly thrilled because they can live like kings, head over to the outlet malls and buy half the place up. The only problem I have to remind them of is that they have to get them past customs. MOST are aware of this and take proper steps to avoid the tax, others I usually have to give hints.

One poor soul purchased *10 complete sets* of high end golf clubs for friends and family before he realized he can't get away with all of them. For those that are curious, he was from Scotland, how's THAT for racial stereotyping?

Unless the golf clubs and apparel were made in America (very unlikely), then the weak dollar had nothing to do with the low price. It would make most consumer goods on store shelves more expensive. Of course, if they came from an outlet mall, then the cost is simply a result of the manufacturer trying to reduce inventory, even if they have to eat the cost and produce more than what is demanded.

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I just got back from Dublin, Ireland and definitely felt the weak dollar. It was expensive. I met a girl who is begging me to ship her some things from here, she was discussing this whole topic in depth. Very interesting city in terms of the economy. I talked to a lot of people, particularly cab drivers about it:) Almost the whole population of the city is like an average age of 30. It was so young, it was crazy. Companies are locating there and recruiting yound people from all over the world. Every business (particularly restaurants and pubs of course) are busy at all times. Most of the older people I talked to said they bought a house like 12 years ago or around that time frame for around 30,000 to 40,000 pounds (former currency before switch to euro). Their homes are now worth 850,000 to 1.something million! This is very notable. Just thought I would share.

So do they feel rich or do they feel they are struggling?

In essence what I want to know is does the average Dubliner feel like a king or feel like the average American who is struggling?

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So do they feel rich or do they feel they are struggling?

In essence what I want to know is does the average Dubliner feel like a king or feel like the average American who is struggling?

It's hard to generalize about those things, and I think it would be going to far to say they feel like kings, but certainly people are very aware of how rich the country is compared to how it used to be. According to wikipedia:

In a 2003 European-wide survey by the BBC, questioning 11,200 residents of 112 urban and rural areas, Dublin was the best capital city in Europe to live in, and Ireland the most content country in Europe.

It also came in on top in another happy-city survey that was released last year.

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Locally, if we shop in Mexico, it costs us more. If Canadians shop in the US, it costs them less. Best bet, keep extra bars of gold in your safe.

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