USD vs Euro - the future?

[watterinja]

I've been watching the USD-Euro exchange rates of late. I'm interested in figuring out where to park funds for the next while - USD, or Euro?

From what I can see, so far - it looks like the USD is coming under increasing pressure. Today its hovering around $1.43 / Euro.

I'd be interested in hearing what other folks are reading into the situation & how they are protecting their investment asset values.

[chinthee]

This guy is the man and he says:

Buffett sees dollar weakness

DAEGU, South Korea (Reuters) - Billionaire investor Warren Buffett said on Thursday he expected the dollar to weaken further, adding that South Korean stocks offered better value than other world markets

.

Buffett sees dollar weakness - Yahoo! News

This really sucks for those of us who have most of our earnings and assets dollar denominated, even if diversified.

[watterinja]

Thanks chinthee. Warren Buffet's great.

I'm looking to convert USD to Euro-denominated in the near future. It looks like it may be on the slide for the next while.

[Mid]

and no-one would let me buy euro's at the launch @ 82c .......................

[hillbilly]

I am confused. What do you mean with the word funds?

[watterinja]

^ Well, when quoting clients, I can go either way in USD, or Euro. Typical agreements may run for say 6-12 months with rates fixed. To bill in the most appropriate currency would be useful.

In this sense, future incomes (funds) are parked in a particular currency.

[chinthee]

DD, I think TD is ready for a business and economics thread with the number of new posters coming on. I personally would love that, and I'll bet there's enough interest. Those guys always posting on tv would love to slug it out over here too probably. Mid will have to invite them, but I can get Vegasvic to come over.

[DrAndy]

I suppose the US$ will keep weakening in tandem with the oil price

that is the only way to stop rampant inflation in most western countries, as oil is paid for in US$

[hillbilly]

So how much does this cost?

[DrAndy]

20c or thereabouts HB

[watterinja]

So how much does this cost?

Based on the last year's slippage - around THB 1 million (conservative).

[Thormaturge]

With the increasing likelihood of a Democrat government in the USA after November, 2008 I believe the Dollar will begin rising on the expectation of a more fiscally competent government. The time to buy Dollars is probably around May, 2008. By November the Dollar should already have risen in anticipation.

Of course, if the Republicans manage to get in again the Dollar will drop like a stone, so maybe ditch Dollars in October just in case.

[watterinja]

Thanks TT,

I found the following chart of interest, especially when tracked over 5 years.

EURUSD - Euro in United States Dollar - Google Finance

[britmaveric]

Expect $ to rise in 08. Good time to buy $.

[watterinja]

^ Why would you expect $ to rise in 08, besides TT's point regarding improved governance?

I'd be interested in the fundamentals. From what I'm seeing, is a US economy that's run itself into what appears to be a spot of bother, that they seem to be struggling to talk themselves out of.

[William]

Exchange rates, as with most things in life, depend largely on supply and demand. With the US's current spending in Iraq, they need to print more money than they have. So long as the US is in Iraq, and other nations, such as the UK, maintain relatively high interest rates, it is unlikely the $ is going to increase in value to any significant amount.

Euros are a good "hard" currency to go with. More and more of my pricing is being done in Euros. Dollars are nice, if you don't need to move the money offshore. If that becomes a factor, then Dollars are no longer worth the time and effort.

Also, I highly doubt a Democrat lead government, if elected, will be fiscally sound.

Just my two cents worth.

[watterinja]

Euros are a good "hard" currency to go with. More and more of my pricing is being done in Euros. Dollars are nice, if you don't need to move the money offshore. If that becomes a factor, then Dollars are no longer worth the time and effort.

Thanks, William - excellent review.

I agree completely with your view of Euros being the "hard" currency to use for pricing. The long-term history (5 yr) seems to bear out a longish-term upward projection, unless the US manages some kind of miracle.

I used to think of the USD as the "hard" currency while the Euro was finding its feet, but the shoes seemed to have changed feet of late.

I'll begin moving towards Euro-based pricing structures in future dealings. I seem to feel more comfortable 'over there'.

[britmaveric]

$ is fundamentally strong. Septics economy is expected to increase GNP by 2-4% in 2008.

Remember feds pushing weak monetary policy, once they decide to go the other way. Watch out.

[William]

^not too sure I agree with that. Costs still outweigh income.

Strange that the last two Republican governments have caused balance of payment deficits, while the last Democratic government caused a surplus. One would usually expect it to be the other way round.

[Mid]

give me a break ,

the states is bankrupt ,

luckily the RTW can't afford to foreclose .........................

[William]

^to be fair though, not the first time. Many recall the Japanese-US deficit of the 80s and hope things will turn out the same.

Doubt it'll happen...

[watterinja]

^not too sure I agree with that. Costs still outweigh income.

Mid

give me a break ,

the states is bankrupt ,

luckily the RTW can't afford to foreclose .........................

A lot of truth in these statements, as I read things at the moment.

[daveboy]

I wouldn't invest in the dollar it won't be long before China floods the market with about a trillion dollars.

[watterinja]

^to be fair though, not the first time. Many recall the Japanese-US deficit of the 80s and hope things will turn out the same.

Doubt it'll happen...

I lived in the states (Chicago) around late 1990's. The general impression I had was of a country that had peaked economically in the 1970's & was on the downhill roller-coaster of consuming past assets & infrastructure, without a decent replacement policy.

Most folks seemed to be living a little beyond their means. Thoroughly nice people, but seemed a little myopic about their true position in the world village.

[Mid]

pictures are more effective than words for me , though I enjoy reading what others have written ,

that said here's two cartoons .