The Rising Dollar: Fortune or Fluke
Stronger Dollar? What It Means to the Average Consumer As measured by six major currencies, the US dollar has appreciated 19% during the past three months (August to October 2008). To be specific, the US dollar index is now at 85 up from the low of 71.3. The reversal takes the valuation of the US dollar back to October 2006 levels. It just experienced its best week of appreciation in almost 16 years. By any measure, the stronger dollar was unexpected by the financial market in terms of its speed, timing, and magnitude. Typically, a strong currency should be the sign of the strong economy. However, everyone knows that America’s biggest financial institutions today are insolvent and some had even filed for bankruptcy. The government is also spending millions to “bail-out” everything from banks to insurance companies to auto manufacturers. If that’s not enough, the value of commercial real estate is sinking together with residential real estate.
“We’re not heading toward a depression”
"We're not heading toward a depression," the chief economist of the International Monetary Fund, Olivier Blanchard said in an interview for washington post. "We've learned a few things in 80 years." "What we are witnessing is mass selling on a global scale due to a combination of sheer panic and fear, combined with complete uncertainty over the future of the world's major economies," GTF Global Market U.K.'s Head of Derivatives Martin Slaney tells AHN.
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