[nsjong]

So I've been checking stuff out recently as I need to pay some people in US dollars. (sorry fureshi, but my friend wasn't home today so tomorrow, I'll pay for sure)

I use the currency calculator and it says today's conversion for US to CDN was... 1 = 1.1?!

That is crazy. Just a month ago, it was 1.7!
How far will it drop? I assume at this rate, Canadian dollars will be worth more than the US currency, right?

 

[ScubaSteve87]

wow are you serious? Thats pretty nuts.

 

[Veniogenesis]

Actually, I think it's more that the Canadian dollar has been rising steadiily for a long time.

Take a look at USD vs Canadaian:
http://finance.yahoo.com/q/bc?s=USDC...=on&z=m&q=l&c=

And then USD vs Euro:
http://finance.yahoo.com/q/bc?s=USDE...=on&z=m&q=l&c=

Ya, the Canadian dollar is getting nice.

 

[AlanY]

The better graph to consider is the US Dollar Index, which compares the US dollar against a representative basket of foreign currencies (Euro, Yen, Pound, Canadian dollar, Krona, Franc). The basket is roughly based on each currency's proportion of the global economy.

You can see a graph of it here:
http://stockcharts.com/gallery/gv?$USD

In the last six months, and especially in the last month, there has been a deterioration in the value of the US dollar. The long term trend has been strongly downward since 2003.

Economics is a complicated science, but obvious factors influencing this include the twin deficits (trade and budget). If the Fed's interest rate increases cease, it will fall further. That won't be a bad thing for manufacturers, but it's a double-edged sword.

Canada is in the opposite situation. After years of underperformance, the currency is extremely strong relative to the US dollar -- at a 28 year high today -- thanks to a strong economy, a balanced federal budget, high demand and pricing for commodities, the prospect of rate increases to battle inflation, etc. We will almost certainly see the CAD at above $0.90 USD in the very near term. Whether we see it above $1.00 USD is for economists to project.

 

[1911]

i know this sucks..when i went to montreal several years ago the canadian dollar was like 51 cents to the american...i lived like a king over there....what is going on??

 

[Sladeophile]

I lived in Canada for a few years and saw the CDN Dollar steadily rise as time went on. I think it went from 1.7 up to 1.4 while I was there. Crazy because I remember when I was a kid and it was almost 2:1. Good for canucks, bad for us yanks that want to come up there and buy cheap stuff. No longer!

 

[purk]

I believe we are in a deep recession and have gigantic amount of debts. The war in Iraq is taking a toe on our spending and we are lending a lot of money from abroad to finance the war. We also got hit hard last year due to Katrina, but most of this is due to bad economy.

 

[Sladeophile]

Yeah, this economy is so bad that we all spend hundreds of dollars on multiple headphones and equipment, sports and exotic car sales are doing extremely well, people are buying multiple houses, and unemployment is < %5... but I do agree that spending is out of control and something should be done about the gas prices, but I will be the last person to complain about the economy right now, as should anyone who has the time and money to blow on nice headphones, IMO...

 

[crazyfrenchman27]

Remember the eighties?

Yeah, well, another inflationary cycle is in the works to pay off the debt with cheap dollars.

This is what happens when you don't elect a fiscal conservative.

-Matt

 

[nabwong]

This is the reason

http://www0.gsb.columbia.edu/student...veryBreath.wmv

 

[Rock&Roll Ninja]

Quote:

Originally Posted by Sladeophile Yeah, this economy is so bad that we all spend hundreds of dollars on multiple headphones and equipment, sports and exotic car sales are doing extremely well, people are buying multiple houses, and unemployment is < %5...

Right now we are a nation of debtors, and the whole "amazing housing market" can turn south in as little as 1 day (black friday anyone?). Many many people are buying multiple houses on intrest-only payments, with the prospects of selling them at a profit. As soon as the housing bubble bursts we will see tens of thousands of "millionaires" become bankrupt instantly, and houses will become alot cheaper in many locals...

And unemployment is well over 5% in many places.

 

[braillediver]

Wasn’t there speculation that after the Dubai Ports deal falling through that Rich Gulf Nations would sell of the Dollar and it’s value would decline?

But think- everything made in Canada is vastly more expensive here in the USA and as such Canadian exports will decline. So it’s a double-edged sword.


Mitch

 

[PinkFloyd]

You all do realise that if China sold it's stash of US dollars on the open market the entire US economy would collapse within hours?

Just an interesting factoid

 

[saint.panda]

Actually, the dollar is still far from cheap. In real trade-weighted terms, it remains close to its 30 year average.

(from the Economist, 2004)

A fall in the dollar is both inevitable and necessary to reduce the trade deficit by making imports dearer and exports cheaper. America’s trade deficit reflects its lack of saving both on the private and government level expressed through low saving rates, high household borrowing and high government spending (budget deficit).

So for the trade deficit to shrink, either customer demand has to grow more slowly, i.e. people need to save more, than that of their trade partners, or the dollar needs to fall further, or a combination both. Ideally, the US would need to reduce imports (and not through tariffs please) because at the present level, exports would have to grow twice as fast as imports just to keep the trade deficit constant, and tighten fiscal policies or hope for looser policies abroad, especially China. So the dollar’s problem is not that it's too weak but still too strong in light of the trade deficit.

 

[VicAjax]

Quote:

Originally Posted by PinkFloyd You all do realise that if China sold it's stash of US dollars on the open market the entire US economy would collapse within hours? Just an interesting factoid

but china won't do that, because as goes the US economy, so goes the China economy. and if US and China go in the tank, everyone else will be riding the global flush right down the toilet.