Can anybody on PF simply and concisely explain the interrelationship of the above currencies as they affect exchange rates. I believe Wall Street, the barrel price of oil and other factors also have some bearing on this.
Currency rates: $ € ₤ zŁ. The interrelationship.
delphiandomine 86 | 17823
16 Oct 2010 #2
It's what the market dictates.
It really depends on what is going on in each of the countries as an individual compared to the other countries mentioned.
I won't pretend to be an expert in economics, but recently it was pointed out that the US, Canadian and Australian dollars were all converging at parity. For the longest time, the US Dollar was king and was worth anywhere from 1.50 to 1.30 Canadian dollars. But due to several factors like interest rate policies in individual countries (attracting foreign investors) forecasts of economic growth, jobs data, current and future commodity prices etc. the Canadian and Aussie dollars have surged.
Both CA and Aus economies are heavy on resources (mining, oil, forest products etc) and are suppliers to Asia, where the boom continues to feed a growing middle class in China, India and other nations. So, consequently their "net value" is on the rise. Compare that to the US where the housing crisis, unemployment rate and national debts / operating defecits has decimated the nation's consumption abilities, and one would easily see where the money is flowing to, and the effect on currency evaluations. Who want's to bet on a lame horse?
Also, you have to look at who holds a great deal of American Debt. The Chinese have been snapping it up over the years, but if they get antsy, they can (and likely will) dump it for something a little better - causing the USD to fall further.
Additionally, the US may want to have a "low" dollar in order to make US goods more affordable around the world, thus putting Americans back to work.
I am sure somebody closer to the situation in PL could point out why the zł is a rising star compared to the US dollar....
So, no, there is no simple answer.....
I won't pretend to be an expert in economics, but recently it was pointed out that the US, Canadian and Australian dollars were all converging at parity. For the longest time, the US Dollar was king and was worth anywhere from 1.50 to 1.30 Canadian dollars. But due to several factors like interest rate policies in individual countries (attracting foreign investors) forecasts of economic growth, jobs data, current and future commodity prices etc. the Canadian and Aussie dollars have surged.
Both CA and Aus economies are heavy on resources (mining, oil, forest products etc) and are suppliers to Asia, where the boom continues to feed a growing middle class in China, India and other nations. So, consequently their "net value" is on the rise. Compare that to the US where the housing crisis, unemployment rate and national debts / operating defecits has decimated the nation's consumption abilities, and one would easily see where the money is flowing to, and the effect on currency evaluations. Who want's to bet on a lame horse?
Also, you have to look at who holds a great deal of American Debt. The Chinese have been snapping it up over the years, but if they get antsy, they can (and likely will) dump it for something a little better - causing the USD to fall further.
Additionally, the US may want to have a "low" dollar in order to make US goods more affordable around the world, thus putting Americans back to work.
I am sure somebody closer to the situation in PL could point out why the zł is a rising star compared to the US dollar....
So, no, there is no simple answer.....
johnny reb 48 | 7975
26 Sep 2022 #4
Global investors' resounding rejection of the new British government's plans for tax cuts and borrowing continued Monday, with the pound briefly falling to its weakest level against the U.S. dollar on record, leading the central bank and Treasury to speak out in an attempt to soothe markets.
Ron2
9 Sep 2024 #5
The currency pairs always change. A correlation can be best explained in a long term (1-2 years) as then you can determine the dominant trend.