In the last day of September, dollar/euro exchange rate fell to the lowest point in eight months. Before this happened, dollar/yen exchange rate had broken the deadline of 15 years.
Although dollar depreciation is caused by America’s terrible economic situation, it is easy to see that American government’s strategy that use dollar as international money.
To stimulate export by depreciate dollar is a good choice for American government. Earlier this year, Obama administration brought up “export doubling programme” in the next 5 years, but it does not perform as well as their expectation, so America has to make a big fuss about dollar depreciation. Actually, dollar depreciation has made America amount of profits. Some data shows that from 2007 to 2009 trade gap between China and USA decreased 3300 hundred million.
At present the property that hold by foreign countries reach up to 5 trillion dollar, thus dollar depreciation will make a big loss for every country. A drastic fluctuation will be caused in the international financial market since dollar depreciated. The sustaining depreciation of dollar and frequent fluctuations will increase the amount of trade in foreign exchange market and exchange rates will fluctuate frequently, and then cause foreign exchange market turbulent.
Countries that just get rid of financial crisis have not entered the healthy and sustaining growth track, so no country like its own money overvalued, to the contrary, they prefer money undervalued so that stimulate export. Just because of this, dollar depreciation stirred up many countries’ sensitive nerves.
Although dollar depreciation is caused by America’s terrible economic situation, it is easy to see that American government’s strategy that use dollar as international money.
To stimulate export by depreciate dollar is a good choice for American government. Earlier this year, Obama administration brought up “export doubling programme” in the next 5 years, but it does not perform as well as their expectation, so America has to make a big fuss about dollar depreciation. Actually, dollar depreciation has made America amount of profits. Some data shows that from 2007 to 2009 trade gap between China and USA decreased 3300 hundred million.
At present the property that hold by foreign countries reach up to 5 trillion dollar, thus dollar depreciation will make a big loss for every country. A drastic fluctuation will be caused in the international financial market since dollar depreciated. The sustaining depreciation of dollar and frequent fluctuations will increase the amount of trade in foreign exchange market and exchange rates will fluctuate frequently, and then cause foreign exchange market turbulent.
Countries that just get rid of financial crisis have not entered the healthy and sustaining growth track, so no country like its own money overvalued, to the contrary, they prefer money undervalued so that stimulate export. Just because of this, dollar depreciation stirred up many countries’ sensitive nerves.
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