Dollar: falling in a chasm

How the dollar can low fall? When easy sliding develops into dangerous movement under a slope? As landslide falling of dollar gains in strength, this question becomes as it is impossible for more actual. For a week when Feredalnaja the reserve system has lowered the rate on 05 % the American currency has fallen to 2 % against a basket of the basic currencies, having established a new minimum for all history of floating rates which has begun the existence since 1973. Falling against euro has appeared the most expressed. Together with this currency the dollar has reached record heights at level 1,4283. People with weak nervous system and troubles inclined to display see many reasons for a panic. Some worry that the central banks and other official investors will start to get rid of dollars. The decision of the government of Saudi Arabia not to follow the lead FRS and not to lower the rate has generated conversations that oil kingdom namereno to refuse a binding to dollar which it used within 21 years. Others are anxious by that dollar falling will provoke acceleration of inflationary processes in America and, thereby, will limit possibility FRS to reduce the rate. Europeans worry that space growth of euro will kill region economy. Nikolja Sarkozi, the president of France, has declared recently that growth of euro above a mark 1,40 will create the serious problems connected with competitiveness of the European goods in the world markets. Some fears are too exaggerated. If to consider fast growth of inflation in Saudi Arabia, there is nothing surprising that the falling dollar delivers them many efforts. Revaluation according to an US dollar exchange rate, or is faster a binding to a basket of currencies - something like the system accepted now in Kuwait - would be more adequate decision. However the government of Saudi Arabia denies possibility of similar changes in the foreseeable future. Not further, as on September, 26th the managing director of the Central Bank once again has confirmed, that it is correct to a binding to dollar. However where bolshee value has that change of a currency mode in Saudi Arabia, in particular, for exporters of oil, at all does not mean a dollar collapse. Refusal of a currency binding does not mean inevitable bulk sellings of dollar actives from the state. To the inflationary risks connected with easing of dollar, too the great value also is given. The majority of economists recognise, that the interrelation between weak dollar and a rise in prices for import loses recently the durability, in particular, in the USA it is already hardly notable. Robert Vigfussona, Natasha Shitsa and Joseph Ganona`s last research - three economists from FRS - specifies that the countries more willingly accept consequences of the growing exchange rate for the profits, exporting in America, rather than in any other country. Probably, it is connected with desire to save the share of the market in the USA. Certainly, a similar sort reduction of profits cannot last infinitely, however, while there are no signs of aggravation of price pressure as a result of dollar devaluation. At present, easing of the American currency reflects expectations of investors concerning monetary policy FRS, but it is impossible to consider it as a stumbling-block for acceptance by the Central Banks of independent decisions. Last week, after the publication of variety of pessimistic economic reports, the financial markets have raised probability of decrease in the short-term interest rate. Sales volumes in the habitation market continue to fall, the number of not sold houses in the secondary market has reached a 10-month`s stock, and the consumer trust has disappeared without a trace. In process of growth of a bale of gloomy economic news, profitableness under 10-year-old exchequer bonds which grew earlier against inflationary fears has started to decrease. Today pessimism centre is America and, hence, the falling dollar. However very soon we can have we ighty reasons for trouble concerning Europe. The German index of business trust Ifo falls four months on end, in September it has reached a 19-year-old minimum. Consequences of credit crisis against euro strengthening can put the European companies in extremely difficult situation. Until recently, the European central bank used the best efforts to bring to nothing gravity of risks, and signalled about possible increase of rates. Its aggression is one of the reasons of growth of euro. However if America really in a trouble, on economic horizon of Europe too soon there will be storm clouds. And then the American currency becomes the general problem. On materials of printing edition The Economist Forexpf. Ru - Forex News / news Forex