The dollar without fear of the rise Trump gives wings
Multiplied by the point while the 14 years against a basket of six major currencies on shocking news. The ballast makes manufacture of the United States and emerging markets, led to the exit of capital, said economists. This increase is "a rope around his neck in the world economy".
But the real shock, while the dollars after the presidential elections, has risen to 6% is still far below its record high against the euro and the yen hit 12%. Experience promoting data led to problems, we can imagine the degree to which things are more complicated than they really are.
The fed's index of the value of the dollar against a basket of currencies traded 26 partners, all correct inflation in these countries. Is a pointer to a dollar index broke, just six currencies and inflation of the dollar does not match. low residual 10% rates peaked in 2002, reservations not less than at the peak of 19% in 1985 the emergence of dollar revenues led to an international agreement to coordinate fed.
Base factor, the rise of the dollar. Robust growth and low unemployment, fuelled by United States policy the third time two and a half years of short-term interest rates are likely to increase in the year 2017. This will push the dollar up to increase your return on investment in United States Treasury bonds and other fixed-income assets. Investors also bet that the elected President Donald · High asset growth through tax cuts and investment in infrastructure.
Competitive weaknesses
However, "the debt crisis in the eurozone and the difficulties of China's currency, the main competitor of the dollar weakened and strengthened its advantage" the rest as main reference currency, Economist said it was Prasad of Cornell University in the e-mail message. A better idea than most, the end of the euro offers the Dutch ABN AMRO Bank $1.15, 2017, six less than 95 cents. "Trump $ gave wing," said in a research report, in November.
Strength of the dollar is a negative economic growth in the United States, the country's competitiveness in the global markets for goods and services. It is usual in dollars, said that an increase of 10% to 1% of gross domestic product, the trade deficit leads to a loss of 100,000 of thousands of jobs, leading Brad Setser of the Council of foreign citizens in New York. Several American companies like Boeing, Emerson Electric, 3 m and United technologies were, remember the damage, this leads to a stronger dollar.
Dollar strength in emerging markets such as Mexico and Turkey, problems, because it increases the cost of foreign currency denominated bonds issued in local currency to pay. Entities and problem of these countries pay high interest rates, buyers, to win, when the Fed increased interest rates. Mexico's State oil to devalue the Bissau as a major factor in the first quarter of 2016, increase the value of 23% of the debt of Bissau. In China issue debt of sudden problems building selling a bond.
At the end of the year 2015 with 9.7 billion out of United States debt issued in dollars and one third of issuers in emerging markets, according to the Bank for International Settlements (bis), the coalition of central banks in several countries is equivalent. "If the trend continues, should the currency crisis in emerging markets, said his perception customer variant, a market research firm in London, in December last year."
Victory, emerging as it rises, the dollar against the currencies of all the competitiveness of enterprises and increase the cost of borrowing last year economists said December bis Nicholas · Including, Stefan Avdjiev · Cohen can be overridden in a report. This applies to most fragile finances of the country.
Many analysts see no reason to pay attention to the rise of the dollar. Most items in United States dollars in the emerging bond market from a sharp rise in the dollar are not affected will be compensated by the financial product or dollars for recovery of fixed. In 1997, as rising interest rates in emerging economies in Asia, the financial crisis is better cause.
