Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
That was the line that also jumped out at me Harmy.

http://www.forbes.com/business/2002/01/09/0108argentina.html

This is an article about Argentina unlinking from the dollar and proposing that all of America should adopt the dollar instead (I think).

This scenario puzzles me. And it would apply equally to the euro as well.

Doesn't a floating currency work as protection against a recession by keeping exports competitive and imports less competitive when the currency falls? This has certainly helped Australia in the last 2 years in my opinion. If a "union" such as Europe or The Americas adopt a common currency they then lose any benefits of a floating currency. This is going to punish some countries that need a floating currency. It could even force their currency to "float" in other ways ie inflation/deflation.

If the US dollar falls against the euro and/or yen it should help their economy by making their exporters more competitive than they currently are. This will help their deficit as it has helped ours recently and should help their companies drag them out of recession. (Yes I do realise that US assets will decrease in OZ dollar terms if this happens and therefore your decision to sell out)

I find it hard to understand why a strong currency is touted as such a positive thing and a weak currency as such a negative thing when both can have important benefits.

Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.