Falling DOLLAR, Strong PESO

claudiaroj says on Jul 27, 2005, 11:35:

Recent history....world events In just the last two weeks the dollar got very strong because of what happened in London, Egypt and Turkey. Up almost 500 COB's... I think if Uribe gets reelected (as controverial as this is for some) but from a stability standpoint its the best thing that could happen to the country since the peso should strengthen, but by how much I am not sure. A few weeks ago in portafolio newspaper, you may be able to find more info to support this on www.ft.com that many companies needed to invest with the dollar as the main form of currency because the Euro is too expensive for an initial investment and requires more capital depending on the country of origin of course. In just a few posts you may have more answers, I would do some ft.com or yahoo finance searching or ny times as well and see if something comes up. If you get the answer please post, I am very curious as well.

Claudia

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calipro says on Jul 27, 2005, 11:37:

The dollar will not only be stronger against the COP by years end but just about every other currency in the world.

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Albatross says on Jul 27, 2005, 11:43:

. I hope to hell you're right...

“Democracy - a pathetic belief in the collective wisdom of individual ignorance." - H.L. Mencken

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Andy-NY says on Jul 27, 2005, 11:51:

The dollar will strengthen further...... But more against the Euro and Pound Sterling rather than the COP. Inflation fears are overdone and this is one of the reasons for the recent strength. The consensus is that the Fed will continue rasing interest rates, probably to Fed Funds 4 1/2%. Europe growth forecast are .5%-1.5% growth and the U.S. forecasts 3%+.

The only thing in my opinion that can hurt the dollar is the huge deficit. I guess the U.S. can run a higher deficit without hurting the economy, considering that the current deficit is less than 5% of GDP.


Andrew-NY

Andrew-NY

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bufalo says on Jul 27, 2005, 12:26:

calipro - I hope you are an expert because I´ve lost a good amount in the last year by living in Spain (goddam Euro) and now in Colombia. do you really think it will be strongest against all the currencies and why? Please don´t be too technical due to my lack of knowledge as how this stuff works.

"If you don't like it - lump it, take it down the road and dump it." - Archie Bunker played by Carroll O'Connor

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kernow62 says on Jul 27, 2005, 12:40:

Where does the at 5 billion a month to fight the war in Iraq come from? I am curious if it was already covered or will our children and their children be paying this off?

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Peter Miami says on Jul 27, 2005, 13:36:

From everything I have read all the indicator show that the dollar will strengthen against Pound Sterling, Euro, etc. Some of the reports I have read forecast the dollar strengthening against the COP for the rest of the year and also the first quarter of 2006.

Peter Miami

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utopiacowboy says on Jul 27, 2005, 13:39:

The 5 billion? The Chinese are lending it to us in return for a lot of cheap underwear on sale at Wal-mart.

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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adrimm says on Jul 27, 2005, 13:56:

Personal thoughts I think the US dollar is recovering, but it will be a long time (5- 10 yrs or never) for it to regain it's former (pre "war") position.


Why:
1) the euro is now viable investment (never had that 5 yrs ago),
2) Asian economies are coming online and are another investment option
3) the US will have this debt sitting over it

I know several older people who kept their savings in USD (it was always one of the only sure bets), but they lost alot of $ in 2003/4.

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bkelly says on Jul 27, 2005, 14:21:

I hope so I remember when the COP was almost at 3000 to 1 USD...I was living well. I have seen my income drop significantly over the last three years with the peso getting stronger and the dollar dipping.

Some experts in Colombia say the exchange rate will be at around 2600 to 1 by years end.

--bkelly

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platano says on Jul 27, 2005, 14:24:

One of the advantages of being poor... When everyone was freaking out because their 401K's were rapidly becoming 201K's (Enron, World Crossing, etc.) I didn't lose anything because I don't have any stocks or bonds or pension funds (or any consumer debt like a mortgage, car loan, etc.) I'm livin' on the edge here, with no guarantee for tomorrow. Kind of exciting, in a scary way. Personally, I see the dollar getting weaker due to historic deficit spending and imbalance of trade and China becoming the new superpower.

Plátano, el banano verde
Oxigeno Verde ¡Libertad por Ingrid y los demás!

plátano

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BAQ says on Jul 27, 2005, 15:36:

Pension Hope it rises, thats why I put this subject up, to get some feedback. I get a federal pension (in Dollars) and like everyone else, been watching my income FALL, would LOVE to see it back at 2990 per dollar again, what a difference 2 years makes !!!!!

Semper Fidelis !

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Gator says on Jul 27, 2005, 18:15:

I Look For $2600/$2700 by year's end or by early 2006.

"Brevior Sltare Cum Deformibus Mulieribus Est Vita!" .

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juanalejo says on Jul 27, 2005, 19:04:

Dollar If the courts do not allow the reelection it should go towards the 2500 mark if the reelection is allowed God help the exporters.

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juanalejo says on Jul 28, 2005, 06:26:

Tinto That is what most of the people I know have done, invest in capital equipment, pay off dollar debts and get peso debts. Most of the exporters I know are not interested in a strong or weak peso, simply a stable one.

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helen says on Jul 28, 2005, 12:18:

I don't think the peso will weaken anywhere near 2,600/2,700. carrasquilla says the peso is so strog because of the dollar but the dollar has strengthened so much already this year, and the peso is still strengthening. remitances are starting to fall a bit and the peso is still hovering just above 2,300. we will have loads of dollars coming in this year and next from the bavaria sale and that will make things worse. i read one analyst who reckons the peso could strengthen further by the end of the year to 2,200 per dollar. a nightmare.

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utopiacowboy says on Jul 28, 2005, 12:44:

Why is this a nightmare? I hope it continues like this. Our Colombian holdings just get more valuable.

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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william_andrew_channell says on Jul 28, 2005, 15:15:

I agree with utopiacowboy. Die Dollar Die!!!

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Peter Miami says on Jul 28, 2005, 15:25:

U.S. Dollar Although there is some short to medium-term dollar support coming from the absence of a Chinese timetable on their revaluation efforts, the end-effect is only this: the rug is still being pulled from under the dollar's feet. The only difference is: the rest of the world's rear-end is being spared the dollar's hard landing.

Temporary dollar-strength is exactly what the rest of the world needs - particularly Asia and Europe. Temporary dollar-strength is exactly the opposite of what the US needs - despite all of Allan Greenspan's fluff about "market pressures, which appear poised to stabilize and over the longer run possibly to decrease the U.S. current account deficit." (Blah, blah, blah)

Vaguer words were never spoken. Yet, they predictably sufficed to reverse steep dollar-losses on Friday after the disappointing non-farm payroll figures were released. People are too lazy to look at the facts and think for themselves. We have all become "expert-junkies."

The reality is that continuing dollar-weakness now could be catastrophic for the entire world-financial structure. Asians and other countries desperately want to unload their tremendous dollar surpluses - but they can't, for fear that any larger-scale sell-off might cause a rush to the exit doors.

Therefore, what they all need is a temporary reprieve, a carefully engineered environment of apparent dollar strength that will allow them to quietly unload what they could never openly propose to sell:

Their dollar reserves.

Continued, incremental interest rate hikes by the Fed, although they showed next to zero effect until the beginning of this year, are providing the public rationalization for why the dollar is suddenly rebounding. This effect is bolstered by the ECB's decision to leave its rates where they are. The result is a climate wherein pressures on the euro decrease, Asians no longer need to convert so many of their dollar surpluses to buy US treasuries, the dollar temporarily "stabilizes" - and foreign countries can keep on selling their dollars into this artificial "strength" until they are home free, safely invested in euro deposits.

The final effect on the dollar is still as catastrophic, and still as inevitable as a sudden rush to the international exit-doors - but with far less deleterious consequences to the world financial system. For, once this artificial dollar-strength dissipates after all of the major players have decreased their holdings to below panic-levels, the currency traders of the world, those who bought into this strength to cover their previous dollar-shorts, will suddenly find themselves exposed to the icy winds of rapid-fire dollar-depreciation.

Whoever ends up selling euros or other currencies to these Asian CBs in return for their dollars will get stuck. The "good thing" (at least for the dollar-selling Cbs) is that they will no longer be exposed to a full-fledged dollar-flight when it finally occurs. But their "customers" (individual and institutional forex traders) will get stuck with the full weight of the dollar-bear as it collapses right on top of them.

Peter Miami

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Rubiazo says on Jul 28, 2005, 18:52:

I'm with peter on this one We are so poised for a period of massive inflation it's not even funny. And many people are gonna get burned in real estate too.
GIB I think the peso is more or less pegged to the dollar, it moves so little against it. In the past year I've seen it move all of half of a percent.

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Crazy4Cali says on Jul 29, 2005, 07:53:

I'm not so sure about the peso being pegged. I saw a valuation chart over time on the web (Can't remember the page, but it was a good one) and currencies like Costa Rica's Colon are definitely pegged to the dollar (the graph of Colones/dollar over time was linear and devalued at about 10%/year) while Colombia's Peso went up and down like a stock market graph.

I'm sure, there's some correlation, but it wasn't nearly as strong as Costa Rica's (i.e. linear).

As far as inflation goes, are you talking about Colombia or U.S.?

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colombiabuzz says on Jul 29, 2005, 14:58:

keeps falling Dollar at closing today $2,308.70, OUCH!!!!!

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Rubiazo says on Jul 29, 2005, 15:29:

I'm talking US inflation. I actually think the colombian peso, along with many other currencies, is purposefully being weakened from time to time so it doenst get too strong against the USD. The Chinese are most definitely engaging in this tactic.

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BAQ says on Jul 29, 2005, 15:36:

Hope your right Rubiazo, hope you are correct and it makes sense. I think (and could be very wrong) that a strong COP against the dollar hurts Colombia in the long run, because Colombian goods become more expensive for americans to purchase and import.

Semper Fidelis !

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