Foreign Exchange Rates Headed in the Wrong Direction

Foreign exchange rates headed in the wrong direction
It is amazing that a country, which consumes much more than it produces, imports a
lot more than it exports, saves so little and spends so much, and is mired in deep
imbalances of sorts, can accommodate a currency so strong. That country is none former(a) than the
United States, and that currency, of course, is the billhook.
If one were to go strictly by sparing logic, the greenback should be weak, especially
now, as the United States is in the center of a severe recession. The fact, however,
remains that the US one sawhorse bill is pipe pig a high flyer, defying gravity, flying in the face of
stinting theory. Although the strength of the dollar is apparently an affront to
economic reasoning, this is not all that implausible as it may sound later all, as there
are weirdly valid explanations for why the greenback is as strong as it soon is.
By around measures, the dollar is hugely overvalued and there are compelling reasons
for the dollar to depreciate considerably. The US balance of payments (BOP) has
been in the red for a long time, hovering around 6 per cent of gross home(prenominal) product
(GDP).
In addition, the US budget deficit has been ballooning infra the Bush Administration,
partly due to the so-called war on terror in Iraq and Afghanistan.



The bailouts of
failed financial institutions and corporate bodies have compel an additional strain on
the US budget. The planned fiscal stimulus of about $800 billion by the Obama
Administration would push the US fiscal deficit to a record level, close to $1.5
trillion.
The dollar should be weakening, not strengthening, under the weight of the twin
deficits. In other words, the dollar is strong, in spite of the fact it is tainted by
jaundiced fundamentals. But, then, there is much more to the greenback saga than
meets the eye.
What the US is currently experiencing is a perfect storm, with all conventional
macroeconomic tools breaking down simultaneously. The US...If you want to get a full essay, order it on our website: Ordercustompaper.com



If you want to get a full essay, wisit our page: write my paper