What makes our dollar appreciate or depreciate?

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PANDA_IHB

PANDA_IHB

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This morning while i am watching CNBC, I noticed that the dollar is rallying while our economy is in the state that it is?



Can someone explain to me in economic terms why our dollar appreciates/depreciates against other precious metals (gold, silver, etc.) and other strong foreign currencies like the Euro, CAD, and Swiss Francs, and how it is currently rallying right now?



I'm am seeing a $700B bail out where so many trees will die to print all this paper, with the DOW is headed towards 9000 soon, more and more major banks failing, and our dollar is rallying. Panda is scratching his head and saying to himself, "Uuhh??, I don't get it?"



Any UC Irvine Economics professors out there who can explain this in simple terms so Panda can understand?
 
[quote author="PANDA" date=1222724967]This morning while i am watching CNBC, I noticed that the dollar is rallying while our economy is in the state that it is?



Can someone explain to me in economic terms why our dollar appreciates/depreciates against other precious metals (gold, silver, etc.) and other strong foreign currencies like the Euro, CAD, and Swiss Francs?



I'm am seeing a $700B bail out, with the DOW headed towards 9000 soon, and our dollar is rallying. Panda is scratching his head and saying to himself, "Uuhh??, I don't get it?"</blockquote>


I did explain it to you, but it wasn't what you wanted to hear, so you didn't listen. Dollar up and China down. Start listening panda, or keep hearing what you want and losing money because of it.
 
Let me rephrase my question... Is there anyone other than Graph who can explain this to me so that i can have a second opinion?



Cool, you changed your avitar. What is that thing? Is that a brown Hippo? Dude, please don't tell me that is a Brown Panda?



What happened to your avitar with all the houses falling?
 
[quote author="PANDA" date=1222724967]This morning while i am watching CNBC, I noticed that the dollar is rallying while our economy is in the state that it is?



Can someone explain to me in economic terms why our dollar appreciates/depreciates against other precious metals (gold, silver, etc.) and other strong foreign currencies like the Euro, CAD, and Swiss Francs, and how it is currently rallying right now?



I'm am seeing a $700B bail out where so many trees will die to print all this paper, with the DOW is headed towards 9000 soon, more and more major banks failing, and our dollar is rallying. Panda is scratching his head and saying to himself, "Uuhh??, I don't get it?"



Any UC Irvine Economics professors out there who can explain this in simple terms so Panda can understand?</blockquote>


Long-term trends in currencies are dictated by the relative difference in interest rates paid by central banks. When a central bank (our FED) lowers interest rates, it is less desirable to invest in treasuries, so money leaves the dollar in search of higher interest rates elsewhere. This lowers the value of the dollar. It is why the dollar tanked when we recently lowered rates. Now that other central banks around the world are seeing a slowing economy, they are beginning to lower rates, and investors are leaving these other currencies. When everyone has low interest rates, you want to put your money in the country you think is least likely to default on their debt or lower interest rates even more. Right now, people are betting on the US, so the dollar is showing strength.
 
[quote author="IrvineRenter" date=1222727016][quote author="PANDA" date=1222724967]This morning while i am watching CNBC, I noticed that the dollar is rallying while our economy is in the state that it is?



Can someone explain to me in economic terms why our dollar appreciates/depreciates against other precious metals (gold, silver, etc.) and other strong foreign currencies like the Euro, CAD, and Swiss Francs, and how it is currently rallying right now?



I'm am seeing a $700B bail out where so many trees will die to print all this paper, with the DOW is headed towards 9000 soon, more and more major banks failing, and our dollar is rallying. Panda is scratching his head and saying to himself, "Uuhh??, I don't get it?"



Any UC Irvine Economics professors out there who can explain this in simple terms so Panda can understand?</blockquote>


Long-term trends in currencies are dictated by the relative difference in interest rates paid by central banks. When a central bank (our FED) lowers interest rates, it is less desirable to invest in treasuries, so money leaves the dollar in search of higher interest rates elsewhere. This lowers the value of the dollar. It is why the dollar tanked when we recently lowered rates. Now that other central banks around the world are seeing a slowing economy, they are beginning to lower rates, and investors are leaving these other currencies. When everyone has low interest rates, you want to put your money in the country you think is least likely to default on their debt or lower interest rates even more. Right now, people are betting on the US, so the dollar is showing strength.</blockquote>


Wow, that is pretty much what I have said in the past. Thanks IR for putting it into words that panda can understand. Next time I will go slower for panda here, he seems a bit slow.
 
[quote author="muzie" date=1222761920]Put a picture of a pretty woman in a bikini on it and I will appreciate the dollar a lot more.</blockquote>
Where is that shopped pic of Palin when you need it?
 
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