Carry Currency Called Dollar

[ankitkhosla]

Hi , of late Dollar has been consistently used as carry currency to invest in higher yielding assets..... To which FED officials say that they are ok with the depreciation. Fed Dallas head Fisher had commented that "The depreciation in Dollar has been orderly". So till what level are they expecting this "Orderly" Depreciation????

Also, why is every association mum about Dollar. Be it FED, APEC, all these bodies never comment on dollar's future, is it the "Lull" before the storm

Is it possible that apart from improving its trade balance, FED might be interested to keep dollar weak after seeing EUR rise, which is impacting the EURO zone heavily negatively. So can it be a strategy to remove EUR from currency markets, or will the dollar lose out its status as World's reserve Currency

[rhodytrader]

Originally Posted by ankitkhosla

Is it possible that apart from improving its trade balance, FED might be interested to keep dollar weak after seeing EUR rise, which is impacting the EURO zone heavily negatively. So can it be a strategy to remove EUR from currency markets, or will the dollar lose out its status as World's reserve Currency

Are you suggesting that the rising EUR/USD rate might somehow blow up the Eurozone? If so, don't hold your breath. The euro was introduced in large part to facilitate easier (and less costly) trade within the EZ. The EUR/USD exchange rate doesn't change that.

[ankitkhosla]

Originally Posted by rhodytrader

Are you suggesting that the rising EUR/USD rate might somehow blow up the Eurozone? If so, don't hold your breath. The euro was introduced in large part to facilitate easier (and less costly) trade within the EZ. The EUR/USD exchange rate doesn't change that.

But then EUR being an Export oriented economy can't afford to have an ever rising EUR, as it hampers the exporter's earnings

[rhodytrader]

Originally Posted by ankitkhosla

But then EUR being an Export oriented economy can't afford to have an ever rising EUR, as it hampers the exporter's earnings

The EUR will never be "ever rising". At a certain point prices for the EZ exports will become too high and it will decrease demand for euros. All things being equal, and equilibrium can be expected to develop.