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Strategies & Market Trends : ahhaha's ahs

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To: Elsewhere who wrote (3975)	1/28/2002 8:37:48 PM
From: Ahda	Read Replies (1) of 24758

Currencies are not my specialty, and numerous books have been written on the subject - so here's just my superficial opinion: in the long run an exchange rate between two currencies reflects the relative strength of the economies which is influenced by many factors, among them those you indicate, i.e. the absolute and relative wealth of the population, and the perception of it. the perception this is the truth in a nut shell. Looking at the conditions of the Jbanks you would assume the yen would be worth by far less than it is in Japan but it is only external comparison and in this case where wages are high i am not too sure what the external comparison is other than countries trading their own dollars. Reality is the internal conditions of the nation should be the external guidance of the dollar. In the short run (by "short" I mean a matter of weeks or months) psychological factors In the short run (by "short" I mean a matter of weeks or months) psychological factors can have a meaningful influence on foreign exchange (forex) rates. The reason why I expected a rise in November was a post-Afghanistan strengthening. This effect is now fading. Apropos relative strength: one argument I haven't seen yet in the discussion about the euro is that Argentina is a scary example of what can go wrong if two countries with major differences try to use the same currency. The currency peg fell apart 10 years after Argentina had introduced it so let's see what happens in Greece and Portugal in 2010... Argentina appears to have done little damage to public held companies. I felt that it has to show up somehow in bond transactions or years ends with subsequent currency conversion losses. At this point it doesn't appear to have done much damage to other nations companies who have holdings in Argentina. There are so many business in Latin America from North America but over all it appears to be a non event at present.

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