Danger behind the Dollar Drop

Will current dollar drop being an end of era in forex market? Will the dollar’s dominance on world economy come to end? These are some questions that have been looming as a dark cloud on investment market. People investing in dollars have uncertain speculation over current dollar fall. There is no where to look for what would be future trend of dollar prices. Industries heavily dominated in dollars have gone into deficit and the major outsourcing industry of Indian subcontinent is sure to show a decline in its profit as their main customers are becoming poorer. These are some dangers that loom over the industry due to the dollar drop. But there are many other problems that are on its way if the dollar drops more than its current price.

Experts had been saying for quiet some time that dollar will have a huge drop in recent futures. The US dollar lost 5% of its price against the Euro till late October. Dollar has seen a steady decline against the euro since the start of the year and by the end it has already lost more than 13 % of its value.  Currently, the euro fluctuates around $1.33 which is 3 percent less than all time high. There is a huge change waiting if the dollar prices keep changing as they have done in recent days. Industry experts have determined United States economy as a platform for stability so they have been trading on its currency since ages but now due to changes in the US economy and fluctuation in interest rate in US by Federal Reserve, the value of dollar has changed across the market.

Major countries like India and China who has huge foreign reserves in US dollars are now exchanging it with other currencies like Euro and pound to have a certain future which has brought in large supply of dollar in the market. Investors worldwide have started pulling their money back from United States in fear of decreasing price in dollar. Hence this has brought a sea change in the market of dollar.

But though dollar is reducing its charm but it won’t hurt the market as it could 30-40 years back. Now due to globalization more and more center of power has come ahead which have shared the burden.

This entry was posted on Thursday, December 20th, 2007 at 6:51 pm and is filed under Free Forex Tutorial, Dollar trade, Dollar Exchange Rate, US Dollar, Daily Forex Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.