Currents of Currency Message Board

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Strategies & Market Trends : Currents of Currency

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To: GUSTAVE JAEGER who wrote (35)	5/15/2003 2:55:17 PM
From: Ahda	Read Replies (2) of 594

What it boils down to is you can't adjust currencies to act as the increased incentive to product purchase on the world market. The BOJ attempted to lower the Yen which meant they would reduce product price on the world market. That spurned the desire to hold US dollars so by decreasing Yen value the international companies in Japan found they faced increased world operational costs. The cost of war the subsequent increase in budget deficit combined with an increased unemployment in the US lays heavily on the US dollar now. Germany is feeling the pressure of a strong dollar on internal growth yet corporate Germany investing on the outside of the nation can use this period to their advantage. The burden of strong currency in a global market is cost to internal growth. This then goes back to individual governments who must curtail costs lest their deficit rises far faster than the internal ability of the nation to produce income. It is very apparent that interest rates have not produced the stimulus result that was hoped in the US. Many of the US States balance sheets attest to this. In a global market place if there is parity in labor there is not parity in business opportunity so lower rates can offer additional value when they are changed into other currencies. The results can be a tremendous plus for international corporations to enhance value the assured valued however is only in how well they hedge currency. It is all very temporary but with each additional currency transaction the risk factor increases for all of the Central Banks as well as the IMF. The US dollar dropping in value reduces the debt payment for US loaned dollars but increases the cost in terms of US borrowed dollars needed to pay off external debt. Deflation is then in currency value which has caused an increase of debt. If the depression was partially due to lack of available investment dollars you can have unimaginable deflation of dollar value when the dollar is not capable of sustaining growth at the local level. A dollar should be representative of a nation's capability so it is crucial that the budget is not unrealistically overextended. We had a bubble with excess dollars that didn't disappear the dollar ability to create internal value disappeared instead. So the world markets revalue currency and business survives in spite of and Buffet moves to China. Currency trade is lucrative the burden is on the banks especially now with the US dollar falling as it has been the monetary unit that was most broadly held by the world. The effects of said can end up being exaggerated as the world markets revalue currencies of nations according to atats coming from within the nation . I believe the C dollar is very close to max valuation Canada has a balanced budget but the strength of her dollar might have reached the out priced point for export based opportunity. This takes time to show up as contracts are made long before the difference in dollar value. This places a burden on future contracts and can cause a decrease in product prices. I am laughing as I have by accident presented a darn good case for deflation that is being driven not by product over production but by the currency market.

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