exchange rate Peso-Dollar going down. Why? Predictions?

utopiacowboy says on Mar 29, 2007, 21:29:

I predicted a $1=2000 rate a while back and was widely derided for it.

Disclaimer: any comment I make is inane and is not to be taken seriously, and is so patently ridiculous that no one should take it seriously, even as an insult.

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Waterdawg says on Mar 30, 2007, 09:22:

Utop ! Ain't you the smart one ????? Now answer the question !!!!! WHY ?

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tejasmarcos says on Mar 30, 2007, 11:24:

A-Letter Explanation Not specific to the COP, but good info;

Concerned About the Shrinking Value of the Dollar? Join the Crowd!


Today's comment is by Jack Crooks, our Currency Director, and expert speaker at the 2007 Total Wealth Symposium.

Dear A-Letter Reader,

I've gotten used to being constantly questioned about my views on the U.S. dollar. Wherever I travel, for conferences and other events, I'm always quizzed for my outlook on the greenback.

I guess I'm not really surprised. The dollar has fallen about 14% in value against the euro over the last three years, and has likewise lost purchasing power against many other global currencies. Global investors are understandably concerned - and you should be too. Here's how the buck got into this mess, and how I expect things to play out ...

Though I'm not sure the U.S. deficit plays a big role for the dollar, the market believes it, and that's all that matters. Huge structural fiscal budget and balance of trade deficits are weighing down dollar sentiment - like a battleship anchor tied around its neck. Soaring trade deficits with China and Japan are just part of the story here. Many believe soaring debt - both public and private sector - threatens the U.S. dollar's luster as the world's reserve currency. Longer term, it's a real concern.

Currently, the U.S. dollar is the world's 2nd highest yielding currency - thanks to interest rates that are higher here than in most established nations. Add to this the fact that the U.S. also has one of the world's fastest-growing economies among major developed nations, and you would think the dollar would enjoy more support in global foreign exchange markets - but it's still tanking!

Total Wealth Symposium

Panama City,
Panama,

May 2-5, 2007

ONLY:
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Now, we see evidence that the U.S. economy is downshifting to slower growth - just a 2.5% annual rate last quarter. Of course this creates a growing likelihood that the Federal Reserve may soon begin to cut rates in order to save the economy. But such a move also threatens to knock out the U.S. dollar's prop as a high-yielding global currency.

In such a scenario, the dollar could slip considerably lower. And if so, how will large dollar investors react? Asian central banks hold an estimated US$3 trillion in foreign currency reserves - most of it in dollars. So a falling dollar could easily feed on itself, snowballing into a major dump-the-dollar move in global markets.

There are any number of reasons why this scenario could be delayed. For instance, the Fed says it's still concerned about inflation, which appears sticky at levels above the Fed's comfort zone. And if U.S. growth accelerates again later this year, the Fed may be back in play raising rates, rather than cutting them.

Confused? Welcome to the wonderful world of foreign currency exchange. It's my world, and my focus is to keep tabs on all these big-picture macro trends that drive global capital flows - which is the ultimate influence on all currencies.

Coming up in May, I'll be speaking at the Sovereign Society's Total Wealth Symposium in Panama City, Panama, where I'll be discussing all of these factors at length, and sharing my insights with you about the next big moves I see unfolding in global currencies. The currency market provides you with ongoing and dynamic opportunities to profit in any environment; and my goal is to help you identify and take full advantage of these money-making opportunities. I hope to see you in Panama!

JACK CROOKS, Currency Director

trying to walk a straight line on sour mash and cheap wine...

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