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American Dollar and International market

dolllSagging American dollar value in the international market is a favorable phenomenon for several economies and nations. At the same time it is about to put out the traders’ hopes in NYSE. Depreciating dollar is only favorable for the investors who are leaned to invest through dollar in international stock exchanges. The bubble was started generating in last week of March when following by a very successful trading week, NYSE observed a sudden slump on last Monday of March, 2014. Up till now, USD has been depreciated in comparison to the several major currencies around the world for example, Euro, Pound, PKR, RMN, and Japanese Yen etc.

 

Current Outlook

Everyone knows that USA has been facing economical downturn since the Wall Street major crash in 2008. It was a bubble blast followed by strategically ill decisions by the administration regarding mortgage loans. There are several reasons for what dollar rate has gone down in a steep manner. During the last week of March, the top losers include internet based companies. Because of market decline, S&P 500 index and Dow Jones Industrial average observed a steep slump since last January i.e., 2.3% and 1.02 percent respectively. Major reasons behind this dollar price fall are poor stock market performance, steeply declining market indices, and inability of the FED administration to repay the treasury bills.

Upcoming Stance and Market Reaction Forecast

Value of USD in international market has a mixed phenomenon. It is expected that it will not increase in near future in the rich economies e.g., UK and EU while in weaker ones; it will regain its position. However the prevailing situation is uncertain because African countries have been observing a continuous downturn in Dollar’s price for so many days. In the countries where dollar is not expected to increase may follow the reasons as below:

– Transfer of payment issues and lower proportions of debt from outside

– Lesser trading interaction with USA

– More gold and currency reserves held by the central bank

– Lesser investors are leaned to invest in NASDAQ or NYSE

– Oil rich countries which have stable currency exchange rates

– Gold rich countries may sustain the exchange rate value

International financial analysts are collectively in view that United States Dollar will sooner regain its strength against many currencies however lowering dollar value is favorable for US economy. Depression causing point is sterling poor performance and risk aversion attitude of the investors. However it is believed that investors will come back to the market if Fed introduces some policies that could aid the economy throughout. After the end of current financial year, dollar will slightly go up and then will follow the upward trend as along with the oil and gold prices. One of the major reasons of dollar price downfall is taken as decreasing gold value in the international market due to lessening demand. Once the demand will go up, dollar is expected to regain its previous position indeed.

 

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About Emaad Qureshi