03-05-2003 16:14									#1
	Euro almost at it's introductory value vs the Dollar! Support Apolyton, buy Civilization: The Boardgame

http://www.iht.com/articles/94979.html

quote: he U.S. dollar tumbled to a four-year low against the euro Thursday, as weak economic data, low interest rates and the ballooning U.S. deficit spurred investors to continue seeking higher yielding currencies elsewhere in the world. . The euro surged to $1.1230 on Thursday, up from $1.1100 on Wednesday, pushing it to within about 5 cents of the level at which the single currency was introduced in January 1999 but had never regained in the four years of its existence. The dollar has plunged 2.5 percent against the euro this week alone.

Well this is rather sudden, the Euro regained all the value lost in one year comparing to three years loosing streak before...

http://about.reuters.com/japan/trad...910_64/p4e.html

quote: Why is the position of the key currency so important? According to specialist in global money flow, Masayuki Kichikawa, Senior Economist and Chief of Nomura Research Institute's International Financial Research Group, "The United States occupies by far the largest share of both global trade and foreign currency reserves, which means that other countries are forced to ensure that their own currencies trade at stable rates against the US dollar. Because of this constant pressure, American financial and fiscal policy has the power to affect other countries as well. While it is hard to back this up with hard facts, it probably also explains the real reason for the dominance of the key currency in the broad sense." Mr. Kichikawa adds that nonetheless the influence of the United States has decreased in the case of Europe since the second half of the 1980s, when the EMS was de-linked from the dollar and went over to the German mark. However, it may be too soon to expect the Euro to rapidly take the place of the US dollar as the world's key currency. Kiyoshi Tsugawa, Chairman of Lehman Brothers Japan, sees it as follows: "It is unlikely that America's strength as a nation will decrease to the extent that the Euro is able to take over, given the current vigour of the US economy compared with the situation when the US dollar took over from the pound sterling as the key global currency. Rather, the dollar and the Euro will be used in combination and that the Euro will emerge as a 'second key currency'." Of course, there are others who feel that the United States is no longer able to interfere with Europe's advance. One person who subscribes to this view is Tatsuya Kubo, Manager of the Global Investment Management Department at SG Yamaichi Asset Management. He says, "A strong Europe is a threat to the United States and having been unable to prevent this, the US is trying to build up its authority in Asia. As far as I can see from America's policies on Asia, the US position is informed by the idea that if it can engineer a situation of economic crisis then it should be able to take over the reins of leadership politically as well." Mr. Kubo argues that the United States takes the same approach in its dealings with Japan. "The US is constantly calling for lower taxes and more government bond issues, and would be only too happy if Japan's budget deficit swelled to large enough proportions to cripple the Japanese economy." Meanwhile, Nomura Research Institute's Masayuki Kichikawa said that an eminent US scholar had admitted that the benefits of being the key currency will only be appreciated once they are lost.

Can it happen can Euro take over in light of current US policies?

EU!

	03-05-2003 16:25									#2
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As I have said elsewhere on this forum,

If the Dollar goes as undervalued relative to the Euro by as much as it was overvalued at it's peak, then we will see €1=$1.48

	03-05-2003 16:31									#3
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Is this some kind of competition?

	03-05-2003 16:38									#4
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it's about power... and economic balance, effects are various who knows them all, surely for EU the cost of raw materials will go down, while EU's exports to US/the rest of the world will become more expensive, and the other way in the US, however investors all over the world might be moving their savings into Euros as the value will get be worth relativley more in comparison to other currencies... that is the position dollar held for a long time... there might be a possibility for a change in the situation, and I would say EU/ it's monetary decisions gain weight all over the world with a strong currency ...

	03-05-2003 16:39									#5
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Kropotkin: Apparently. They should work harder to have the currencies at 1:1 ratio for the sake of simplicity

	03-05-2003 16:40									#6
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combat, thats the worst idea ever. regulation of currencies for the sake of regulation is a BAAAAAAAAAD idea

	03-05-2003 16:42									#7
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I knew someone would take it seriously

	03-05-2003 16:44									#8
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Why not simply let the US join the Euro-zone???

	03-05-2003 16:52									#10
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quote: Originally posted by BeBro Why not simply let the US join the Euro-zone???

Sure, if we move the central bank to Paris

	03-05-2003 19:18									#11
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We all knew that this would happen, sooner or later. Value of currencies will change during time. Not a big deal, this symbolic peak is.

quote: If the Dollar goes as undervalued relative to the Euro by as much as it was overvalued at it's peak, then we will see €1=$1.48

When was €1.48 = $1?

	03-05-2003 19:29									#12
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quote: Originally posted by Tuomerehu When was €1.48 = $1?

Start value was $1=€1.17
Strongest value was $1 = €0.86

A difference of €0.31.

So if it swings as much the other way it will be €0.31 + €1.17 = €1.48

	03-05-2003 19:32									#13
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This is very, very bad for Europe.

A stronger EURO can turn out to be very dangerous. Just like with Japan, a stronger YEN is bad. It weakens the export market and damages the job market.

So this is hardly something you would want to celebrate.

	03-05-2003 19:33									#14
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It also makes my booze cruise more expensive.

	03-05-2003 19:56									#15
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quote: Just like with Japan, a stronger YEN is bad. It weakens the export market and damages the job market.

Quite different, Fez. Japan's inner market is much smaller than the Euro-zone's.

	03-05-2003 20:24									#16
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Actually you are mistaken. I never made that inference. Infact, I was just stating that a stronger currency will damage exports. That is why Europe will only lose from a stronger EURO.

	03-05-2003 20:26									#17
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1) Not the citizen that wants to buy imported goods.
2) The effect of a strong currency on such a large common-currency market is much more marginal than in japan.

	03-05-2003 20:27									#18
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If you are looking at inter-European trade it will be unharmed. But if you look at EU Global trade it will be harmed. It is quite simple. This is a fact. If the EU has a stronger Euro it will be damaging.

	03-05-2003 20:29									#19
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of course. I agree with you. but for a large market such as the euro-zone, it will have LESS of an impact.

	03-05-2003 20:30									#20
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Hooray! An economics thread.

Clearly the US should increase its net gross market share policy in order to fulfill a mighty morphine actuarial jengelheimer schmidt.

Anyway, I always thought that having a weak currency was beneficial for exports. Maybe the US will break out of its trade deficit. I love it when Greenspan talks dirty...

	03-05-2003 20:32									#21
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As for the exports: well, yeah.

	03-05-2003 20:35									#22
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quote: of course. I agree with you. but for a large market such as the euro-zone, it will have LESS of an impact.

What I am mostly looking at is EU/US trade balances.

Loinburger, it seems like that. With the dollar lower, exports will jump and the trade deficit will be broken.

	03-05-2003 20:37									#23
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quote: What I am mostly looking at is EU/US trade balances.

well, this is a part of the overall picture, isn't it?

	03-05-2003 20:39									#24
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US exports will increase to the EU, and EU exports will decrease to the US. Overall, giving the US the upper hand. A weaker currency also will typically increase consumer independence on national goods. For example in Argentina, the weaker currency forced consumer to buy products made in the country, rather than ones bought overseas.

	03-05-2003 20:42									#25
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And in the same time, denied them products of higher quality made in other countries.

It's a trade-off. But it is good for manufacturing.

	03-05-2003 20:44									#26
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quote: And in the same time, denied them products of higher quality made in other countries. It's a trade-off. But it is good for manufacturing.

Exactly, but in a economic slowdown having a weaker currency will be better.

	03-05-2003 20:48									#27
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1. Variability in currency values over time is normal.

2. A lot of the rhetoric around "strong currency" (dollar or euro) is misplaced.

	03-05-2003 20:53									#28
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GP: 2:yes but it keeps people buying and selling currency, doesn't it?

	03-05-2003 20:55									#29
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Eurozone: the place of choice for smart investors.