“Obama in China: Breaking the Exchange Rate”

I have chosen my article this week from the New York Times and it is entitled “Obama in China: Breaking the Exchange Rate”. It is actually a blog, written by Simon Johnson, a former chief economist at the International Monetary Fund. Johnson talks about how President Obama is going to Asia and, most notably, China to negotiate China’s unfair exchange rate policy.

Global Markets and the USD

This week my article is from Forbes Magazine and is entitled “Global Markets- Bank troubles hit world stocks, dollar up”. Tuesday the world scrambled when world stocks dropped lower causing a mass rush for US government bonds. Recently the UBS shares were down by almost six percent. The Swiss bank lost a lot in the third quarter as well as UK bank Lloyds and the Royal Bank of Scotland. In order to fix this the Royal Bank of Scotland agreed to sell off businesses as part of a deal to limit reliance on government support. In accordance with this the European Commission says that the euro zone banks showed losses that will amount to 400 billion euros in 2009-2010.

The United States wants the Yuan to U.S. dollar exchange rate to rise

The article talks about how the United States wants the Yuan to U.S. dollar exchange rate to rise even further than it already has. China’s exports need to improve before the value of the Yuan can be raised. The Yuan has climbed over the last four years to nineteen percent against the United States dollar. The Chinese government thinks that it will take two or three more years for China’s exports to return to their normal level.

International Exchange Rates

International exchange rates are a very important focus today for businesses and travelers. It is one topic you always need to be caught up to date on because it changes so frequently. After doing some research on BusinessWeek.com, I had found that on October 28, 2009 that the euro had slightly increased late at night in New York. However, in European morning trade on October 30, 2009 an article called “Euro dips against dollar in European morning trade” tells us quite the opposite.

The U.S. Dollar against Other Currencies

I found an article that talked about the U.S. dollar gaining strength against the European euro because of their economy shrinking. Although, this article was from about a year ago, so the current conditions have changed. The article stated that the dollar rose to the highest level against the euro in almost seven months. It also talked about the strength of the British pound. It was said that the pound fell to a two-year low versus the dollar because of a threatening recession in Britain. The Australian dollar was also mentioned. It declined to its weakest level in almost a year after the central bank cut interest rates for the first time since 2001.

“Dollar Hits 14-month Low against the Euro”

The US dollar hit a 14 month low this last October against the Euro. The Euro has a 14 month hit against the dollar, for one euro is equivalent to $1.5061. The dollar is low to the Chinese, Japanese, and British currency also. Unlike the U.S. economy Asian country’s economy has grown 2.9 percent in the third quarter; this was the fastest pace growth for these countries since 2002. In the past year investors have said that buying the dollar as a safe haven when economic reports are worse than what they were expected.

Worries Rise About Dollar Slide _ but What to Do?

People are continuing to talk about how terrible the dollar has become but no one knows what there is to do about the situation. Are the governments going to change something to fix this? There are a few rumors circulating about a solution. As of right now, there is going to be a floor put under the dollar’s exchange rate. That is the temporary solution. Economies around the world are concerned with the weakening dollar because it can hurt their economy as an effect.

Adjustment and the Dollar

I found my article on foreign exchange rates in the New York Times. It was a blog written by Paul Krugman. This was written in Mr. Krugman’s opinion but he believed that exchange rates have nothing to do with international imbalances. He also felt that the trade deficit is the difference between spending and saving.
He begins his article with the vision that the U.S has a much lower trade deficit than it does and he says this will cause more employment and spending which would cause more spending throughout the world. The reallocation of spending would lead to an excess supply of U.S. goods and services, an excess demand of supplying these good and services overseas. Something has to fall whether it is the relative price of U.S output or U.S. relative wages.

“Foreign Bonds Provide Buffer if Dollar Declines”

The article I read was on newyorktimes.com, published on October 28, 2009 and titled “Foreign Bonds Provide Buffer if Dollar Declines”. The main topic of this article was telling stockholders who buy mainly in USD to buy bonds with inflation protection. The fear that as the recession diminishes inflation will be on the rise again is going around the United States. Scholars are informing investors to be protected from this inflation now rather than wait until inflation actually starts happening.

American Companies in Europe

The article I read was on NYTimes.com, and was written on October 18, 2009. It’s titled, “In Dollars Fall, Upside for U.S. Exports”. The article is about the company Eastman Machine located in Buffalo, New York which makes cutting tools for the textile business and how the decline of the dollar is helping raise their sales in Europe. Due to the recession, Eastman Machine had to lay off almost twenty percent of its workers, but now that the dollar is so low they are expecting to sign a multi-million dollar deal in Europe. If this deal goes through owner, Mr. Stevenson may be able to hire his employees back. While the low value of the dollar is causing many American’s to not be able to travel or buy imported goods, it is good for American exports.