Dollar’s rise in value isn’t enough to hold
2008-05-16 20:29:00 (GMT) (Caymanmama.com - Business News)Washington, D.C. (CaymanMama.com) — CNN reported that that dollar reached its record low during April against the euro. In recent weeks, it has started recovering but because the overseas central banks are resisting to cut the rates of interest, experts believe that dollar will remain under pressure for at least the rest of this year.
Senior currency strategist of Societe Generale, London has said that the current bounce in the dollar is short-lived due to the economic concerns. The manufacturing industry fell sharply and the retail sales that drive a significant part of the US economic activities also suffered decline during the past 2 months. Simultaneously housing market is also falling and unemployment is continuing to rise.
The weak position of the dollar has led to a boost in the country’s exports as the good manufactured in the US seem more lucrative for the foreign buyers but the present account deficit of the nation which measures business with the remaining world is still huge. The deficit in 2006 was $811.5 billion while it went down to $738.6 billion by the end of 2007 which is still big enough since it borrowing from foreign investors is the only way to cover it. If these investors drag their capital from US then the bond and stock prices will fall and will lead to further falling down of the dollar.
CaymanMama.com - Press Release Distribution Service
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