The euro is still falling, oil is falling and investors are flocking to the dollar and gold. I think that at some point the euro will stabilize, at least for the time being, but I don't think that the crisis is over because I think the present bailout will be insufficient and Portugal and Spain will be picked off by speculators like drowning survivors of a shipwreck in shark-infested waters.
And the dollar had been rather too low, so falling somewhat against the dollar (and hence per definition against the renminbi/yuan) is good for our exports.
As for Portugal and Spain, they'll manage, as long as they can make the importance of their austerity measures clear to voters. Fortunately, at least in this regard, both countries have socialistic governments, as does Greece for that matter, so that the opposition is unlikely to go the "these cuts aren't necessary and if you vote us in we'll end them" route.
Of course, this dollar strength is going to be bad for US exports, but I don't think we're at risk of ending up like the pound sterling. On the other hand, continued euro instability will effectively scuttle any illusions about the dollar being replaced as a reserve currency anytime soon - the yuan is untried and not properly priced, the euro is unstable and there isn't any other currency worth mentioning.
The dollar being replaced was always a ways off still, but yes, it has grown rather less likely now.
I see the decision to expand the euro to Estonia in 2011 is really propping it up as a currency.
- 17/05/2010 05:11:07 PM
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I'm just hoping the Euro falls a lot quicker than the Pound over the next 10 days...
- 17/05/2010 05:31:59 PM
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It likely will. Of course, doesn't that ultimately hurt the UK economy? *NM*
- 18/05/2010 03:41:14 PM
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It'll stabilize.
- 17/05/2010 05:37:00 PM
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Yes. Consensus seems to be it will bottom out in 2011 or 2012 at about $0.80 to the euro. *NM*
- 18/05/2010 03:40:45 PM
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There's no true strength in the dollar, it's just that old habits die hard.
- 18/05/2010 08:14:04 AM
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It's still the currency of the world's largest economy, strongest military power and sole superpower
- 18/05/2010 03:39:50 PM
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