By: Mike Campbell
If you are a European tourist, America is the best value for money that it’s been for more than a year right now. The mighty Greenback fell to $1.484 against the common European currency yesterday. The decline was partially attributed to FOREX traders deciding to switch positions to other currencies as their economies emerge (well, at least technically) from recession. One of the newest members of this club is New Zealand which, rather surprisingly, came out of recession in the second quarter of 2009. The Kiwi (New Zealand) Dollar was buying $0.732 which is its best value against the American currency since August 2008.
The US Dollar closed lower against both the Japanese Yen (90.90) and Sterling (£1 will buy you $1.6352). It has declined by almost 2% against the Japanese currency so far this month.
Some selling of US Dollar positions has been attributed to a reaction against the record low yields of the currency on the back of the Federal Reserve’s low interest rate policy. The US central bank decided unanimously to continue with its policy when it met to set the interest rate yesterday.
For its part, the Federal Reserve’s crystal ball sees economic activity “picking up”, but their interest policy will probably stay in place into 2010. Just two years ago, the US interest rate was a whopping 5.25%. The Reserve also promised to maintain programmes designed to help liquidity within the domestic housing market and other segments of the economy which involve purchasing mortgage securities and other financial assets. Fed Chairman Ben Bernanke has said that he believes the US economy has come out of recession; but all that really means is that things have stopped getting worse. Probably.
Dollar Slumps To Lowest Value Against The Euro In A Year
DailyForex.com