(quoted from yahoo finance, click image to magnify)
Left: Dollar versus pound sterling, right: Dollar vs Eur.
Over the last two months dollar has reached lowest point on Eur, many times, not only once.
Using supply and demand argument we could say that decreasing value in dollar is simply because there is more offer to sell dollar than offer to buy it. It is also could be used as indicator that recently people didn't trust dollar that much anymore, further it could be interpreted as people no longer believe in USA economy.
This situation is triggered by announcement of china's government to switch some proportion of its dollar foreign reserve into another currencies. As a big world player, china's decision made some other investment players interpreted in the similar way. The situation of internal USA market, such as crisis in mortgage backed securities (related with housing market, to simplify), dropping value of index equity (S&P 500, Dow Jones), Oil price crisis (hitting new record 100$, from 50$ in less than 3 years) and almost any other indicators strengthen this reasoning, USA is heading to something unfavorable.Even OPEC is pushed to change the standard currency for trading oil from dollar to some other currencies.As you know, some countries (including Indonesia) decision of spending budget is very much influenced by oil price, which is valued by dollar.
As time goes on, people try to find the origin of the problem, one possible(and very possible i think), USA spend too much on Iraq and Afghanistan. Approximately, it could be from $1 trillion to $3.5 trillion. to remind you, starting with thousand, million, billion, and trillion (3,6,9 and 12 zeros respectively).
After all, I really worry about what my government decision will be, regarding these matters.
Over the last two months dollar has reached lowest point on Eur, many times, not only once.
Using supply and demand argument we could say that decreasing value in dollar is simply because there is more offer to sell dollar than offer to buy it. It is also could be used as indicator that recently people didn't trust dollar that much anymore, further it could be interpreted as people no longer believe in USA economy.
This situation is triggered by announcement of china's government to switch some proportion of its dollar foreign reserve into another currencies. As a big world player, china's decision made some other investment players interpreted in the similar way. The situation of internal USA market, such as crisis in mortgage backed securities (related with housing market, to simplify), dropping value of index equity (S&P 500, Dow Jones), Oil price crisis (hitting new record 100$, from 50$ in less than 3 years) and almost any other indicators strengthen this reasoning, USA is heading to something unfavorable.Even OPEC is pushed to change the standard currency for trading oil from dollar to some other currencies.As you know, some countries (including Indonesia) decision of spending budget is very much influenced by oil price, which is valued by dollar.
As time goes on, people try to find the origin of the problem, one possible(and very possible i think), USA spend too much on Iraq and Afghanistan. Approximately, it could be from $1 trillion to $3.5 trillion. to remind you, starting with thousand, million, billion, and trillion (3,6,9 and 12 zeros respectively).
After all, I really worry about what my government decision will be, regarding these matters.
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