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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: Ahda who wrote (3974)	1/28/2002 8:07:18 PM
From: Elsewhere	Read Replies (1) \| Respond to of 24758

Markets reflect cost people bear right? 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. 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...