Euro hits high against dollar, ends just shy (of $1.20)

[Ediacara]

Nov. 28, 2003, 9:37PM

Euro hits high against dollar, ends just shy

FRANKFURT, Germany (AP) -- The euro broke through $1.20 for the first time in its nearly five-year history Friday, surging amid fears about the U.S. trade and budget deficits in thin post-Thanksgiving trading.

The 12-country currency hit $1.2015 in European trading, the highest since it was introduced on Jan. 1, 1999, then slipped back to $1.1995.

In New York, the euro traded at $1.1987 late Friday, up from $1.1935.

More at the Houston Chronicle

[goforit]

1. Wow.........Such a turn since Clinton was in office.

:hurts:

[joeybee12]

2. So much for my trip to Europe next year!

This is actually intentional on Dumbo's part--not sure exactly how it works, but it screws the Europeans when they buy our stuff. I'm obviously not an economist.

[Jane Eyre]

3. A weak dollar makes American exports cheaper

A $1.00 item sold here is still $1.00, but its worth fluctuates with the worth of a dollar in an overseas currency. Thus if a dollar is worth only 80 cents in a foreign currency, then purchasing the $1.00 item in that foreign currency results in a 20% discount for the purchaser. Conversely, a stronger dollar means that foreign entities pay a premium for American goods. Importers of goods face the opposite scenario: a strong dollar means better prices for them in purchasing overseas goods, but a weak dollar makes American goods more competitive in the domestic market.

An executive of a large manufacturing firm here recently spoke to a group of businessmen praising the introduction of "a balanced dollar policy" by the Bush administration. The stronger the dollar, the harder it is for American manufacturers to compete in a global market and the easier it is for Americans to buy imported goods.

[reprobate]

4. And just what, pray tell, american manufactured goods....

....will they be paying a premium for? Do we make ANYTHING here anymore? Even Boeing is farming its wing manufacturing to japan. We are now a service economy, if you haven't heard.

[RainDog]

5. those who have dollars

can afford to buy the goods which are now manufactured in China and India and Mexico and Thailand.

or rather, when you cash your "would you like that supersized?" check, you'll be able to afford more cheap crap from WalMart.

Reagan also promoted a cheap dollar.

...and of course, his economic policy, like Bush's, secretly intended to bankrupt our govt, according to his own advisor, David Stockman.

Now of course, it's no secret, since Norquist has stated his desire to down the govt in a bathtub...if only he meant Bush.

[Melsky]

6. but wouldn't this just make imports more expensive?

and exports would be less expensive for other countries we sell them to. It is also cheaper for foriegn tourists to come here. So presumably it would help business, if we actually manufactured stuff here anymore.

[RainDog]

8. yes. I got my sarcasm backasswards

our goods will be cheaper overseas.

...what are our goods?

weapons, I guess.

so we'll be able to continue to arm the Saudis, some of our biggest weapons clients for a long time, especially those construction contracts for the bin Laden family.

When Reagan was in his 2nd term as prez I was traveling to Europe quite a bit for family stuff and it hurt to convert.

on the other hand, maybe people making 15 cents a day will see their wages fall to offset the higher cost of imports.

there. I think that sarcasm fits.

Seems I've read lately that big currency hoo-has think the dollar has further to drop in the next year. (that's not supposed to be sarcasm, that's supposed to be fact).

[Art_from_Ark]

13. That is the theory, of course, but real-life may be different

I was in Japan when Reagan pressured financial markets and the Japanese government to make the Japanese yen to rise 25% versus the dollar in an effort to sell American goods in Japan. The problem was, there wasn't much to sell that the Japanese wanted. However, the Japanese were selling lots of things that Americans wanted, so the end result was increased trade deficit with Japan.

Admittedly, the lower dollar DID make an American vacation more attractive to Japanese tourists.

In more recent times (1994), the Japanese yen did rise as high as 78/dollar, but that did not seem to make much a difference in the prices of American goods. One thing that has to be taken into account is that trading companies will often agree to their own exchange rate for a fiscal year, irrespective of what the official rate is, in an effort to create stability with their accounting.

[davhill]

7. Maybe if the Dollar Sinks low enough

Foreign manufacturer will bring jobs here for the cheap labor costs.

[RainDog]

9. Isn't the Canadian dollar linked to the U.S. dollar?

what will this do to or for them?

I read that they had very low rates of inflation last year. don't they also have oil reserves?

will that make their oil more desirable, or will it matter as long as oil in traded as petro dollars, not petro euros?

[bemildred]

10. Nope, it floats.

It's been rising against the US$ this year.

[LoneStarLiberal]

11. Low Dollars, Disjointed with Economic News

Dollar demise is in full swing. The Euro hits new highs against the dollar. Ditto for the Canadian dollar against the dollar.

As of this past Friday, the dollar is trading at its lowest level (indexed) since 1997.

It is disturbing to see this kind of weakness from the dollar given the strong economic data that came out last week. As a friend of mine pointed out, the dollar is trading at a low to the British pound not seen since October of 1998...better known as the Long Term Capital Management (LTCM) crisis.

[ze_dscherman]

12. Given the weak economy in the Eurozone, this is even more alarming

It's not a strong Euro, but a weak dollars that has caused this high. Latest economic data in the U.S. show a much faster economic growth.

Even the recent softening of the Eurozone stability pact by Germany and France, who have a higher debt than allowed, has not kept the Euro from soaring. The carefree indulgence in high debts in the U.S., the fact that the foreign capital the U.S. economy is dependent on is shying away, the growing international isolation and the unbearable sums spent for "defense" (more than the rest of the world in total!)all show the vulnerability of the "hyperpower" U.S.

If the rest of the world's economy weren't in such a bad shape, and if the international finance system wasn't so much dependent on the dollar, the whole system would have faltered like the set of cards it really is.

[Spazito]

14. I was in talking with my travel agent this week and she was saying...

that a lot of people checking out holiday locations are requesting that any travel arrangement made are to avoid landing or traveling in the US mainland. No one wants to go through the airport security, etc.

I suspect that this sort of thing is happening in more than a few countries so, even with the low US dollar, tourists aren't going to be going to the US until Asscroft, bush and his cabal are gone.