US dollar
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US dollar (by 6x6 [TN]) Sep 29, 2022 9:23 PM
       US dollar (by Ray-N-Pa [PA]) Sep 29, 2022 9:50 PM
       US dollar (by S i d [MO]) Sep 29, 2022 10:27 PM
       US dollar (by Marv [IL]) Sep 30, 2022 8:16 AM
       US dollar (by Robert,OntarioCanada [ON]) Sep 30, 2022 4:02 PM
       US dollar (by MikeA [TX]) Oct 1, 2022 10:37 AM
       US dollar (by MikeA [TX]) Oct 1, 2022 10:54 AM
       US dollar (by 6x6 [TN]) Oct 1, 2022 3:46 PM

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US dollar (by 6x6 [TN]) Posted on: Sep 29, 2022 9:23 PM

I keep reading about the dollar getting stronger.

I don't really understand this?

Why is the dollar getting stronger?

What causes the dollar to get stronger or weaker?

I was thinking that with all of the money printing, the dollar would get weaker? I guess I misunderstood.

Would anyone explain this in layman's terms, please?

Thank you for your time.

US dollar (by Ray-N-Pa [PA]) Posted on: Sep 29, 2022 9:50 PM

How strong a currency is relative to other currencies out there. If you invest in US Debt, you are investing in the dollar. The Fed has repeatedly raised rates. The bank of England raised rates only 3/4% once so far, where we have raised it about 3%. So people will chance the highest returns so they are flying to the dollar. That means things that are bought and sold in Dollars, are skyrocketing.

The fed has made it clear that they will continue to raise rates to combat inflation. The problem is the fed control rates but they don't control supply line bottle necks, chip shortages, labor force shortages, wars in the Ukraine, stimulus spending or the reduction of fuel drilling.

So hedges against inflation are solid bets for the foreseeable future

US dollar (by S i d [MO]) Posted on: Sep 29, 2022 10:27 PM

Ray did a great job lining out many factors that play into the strength of a currency, in particular the fact that we must ask,"strong compared to what?"

The answer is other sovereign currencies. The Euro, the British pound, the Swiss kroner, etc.

Currencies that are strong are in high demand. The US Government has started to unwind the massive QE (quantitative easing) that's been going on forever. Fewer dollars in the market coupled with high demand means the US dollar (USD) is more stable and therefore more desirable than say a country like Venezuela which is in economic turmoil and whose citizens have all but abandoned their national currency is favor of foreign currency such as "dollar blue", a black market scrip money back by the USD.

The advantage of strong currency is you can buy imports from counties with weaker currencies cheaper. The disadvantage is the opposite: your exports to weaker countries cost more, so that means exports sell less US made stuff as weaker currency nations trade more with other weak currency nations.

For the day to day American, it doesn't matter much, except as Ray noted stronger currencies tend to pay higher interest rates on cash savings, which is one reason why they are strong to begin with.

The USD is also the top world reserve currency. This has been true since the rise of the USA as the preeminent world super power post WW2 as was further strengthened when it became the world wide standard for sale of crude oil. Not enough time to go into that here, but go to YouTube and there's a great video that covers this on a channel called ,"Economics Explained." --184.4.xx.xx

US dollar (by Marv [IL]) Posted on: Sep 30, 2022 8:16 AM

Good job of describing the strength of USD.

US dollar (by Robert,OntarioCanada [ON]) Posted on: Sep 30, 2022 4:02 PM

Currencies are no longer pegged where speculation on currencies is common. While some here see the value of Cdn. is going down against the Us dollar where the Us dollar is going up. During the winter months at lot of produce is imported from the Us and other countries where a shorter growing season along can grow Oranges, Bananas, Sugar Cane, Pineapples. This is causing inflation as when go to the grocery store it is more expensive. Well things are at low time they are predicting the future to get better where as a result of the madman military equipment sales is going to increase where countries that spent less then 2 per cent GNP are now going to spent that level as the reality of the madman who sends people to Ukraine with rusty AK 47 rifles, 50 years old equipment along with short of supplies of everything is a suicide mission. The military here it takes 14 weeks of extensive military training where survival skills are important. Most countries in the world will be buying Us or EU military equipment as in Ukraine the Russian equipment was a complete disaster. As result of inhumanity that Russia has shown most countries in the world will not be buying from Russia. Where hopefully in future they arrest or get rid of Putin madman. What the conflict has done is no longer neutral countries where one side or another.

US dollar (by MikeA [TX]) Posted on: Oct 1, 2022 10:37 AM

Lets say you exchanged $1000 in US currency into European Euro's last October. At the time you spent $1.16 to buy Euro's at the then current exchange rate. So you ended up with 862 euro's.

Russia invades Ukraine and Europe's oil prices go sky high, much worse than here so now it takes more Euro's than Dollars to buy the save volume of Gas. The Euro is now worth less.

Fast forward to today. You exchanged those euro's back into dollars. Today the exchange rate is $.98 so your initial $1000 investment is now worth $845. Why is it worth less than the $1000 you invested? Because you were holding Euro's when they devalued because of the difference between their inflation and ours (among other things).

Had you held 1000 euro's last October and converted them into Dollars then back today it would have looked like this: 1000 euro's to 1163 dollars last October and back to 1186 euro's today. An 18.5% return in one year.

US dollar (by MikeA [TX]) Posted on: Oct 1, 2022 10:54 AM

By the way, that now means that goods that are sitting in warehouses in Europe are cheaper than the same goods sitting in warehouses in the US so they will not be buying as much from us which will cause the US economy to contract more (devaluing the dollar) than what the Fed is trying to do by raising interest rates. Over time this is what stabilized the world economy in a free world supply/demand cycle.

By the same token, travel in Europe is on sale right now because of the exchange rates.

US dollar (by 6x6 [TN]) Posted on: Oct 1, 2022 3:46 PM

Thank you everyone for the replies and examples thus far.

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