<p>Manipulation maybe?</p>
<p>it’s called ‘disinflation’</p>
<p>Because when the US sneezes, the rest of the world pretty much get AIDs. So the other countries’ currencies suck more.</p>
<p>Because the global currency is the U.S. dollar, so when people want to liquidate their holdings amidst a financial crisis, the worldwide demand for U.S. currency goes up.</p>
<p>I heard USD has supa sexy girls!</p>
<p>See where Europe’s economy is going?</p>
<p>From my understanding it goes like this.</p>
<p>With the market in the ****, people are scared to invest in it. As such, they look for alternative investing options that are more secure. Right now, the only thing people trust will not completely collapse is the US Treasury. As such, more and more people are buying bonds instead of investing in the market (either directly or through mutual funds etc) . Now some of the money the US has is actually backed by private credit instead of national credit, thus the dollar is stronger in the global market.</p>
<p>Just my understanding</p>
<p>Exchange rates might be the facet of econ/finance in which I am least knowledgable, but I can tell you it may be in part due to the recession in America (which causes deflation, like what we have seen in the past month…though it’s a cardinal sin to confuse domestic inflation/deflation with devaluing of the currency abroad), or it may be because the European and Japanese financial systems are arguably worse off, or it may be because the dollar was so weak a year ago, it had nowhere farther to drop.</p>
<p>Please disregard this post if you meant University of San Diego.</p>
<p>1)Increased savings rate taking dollars out of the spending pool. Less dollars means more competition from companies (through increased productivity, technology, etc.) for those same dollars. Because currency is nothing more than a representation of productivity to be exchanged for goods and services, much better than bartering. Increasing productivity (even in crappy economic times) means a dollar is worth that much more productivity.</p>
<p>2)Europe’s reserve ratios were way worse than ours. We had a 10:1 capitalization rate, while Europe had 20:1, 30:1, even 40:1 in some banks. They also bought many toxic investments which affected their capitalization, bringing them to their knees. (Many banks only had $1 for every $50 or so their customers put in). The ECB pumped in trillions of euros into the system, reducing the value of their currency (more notes w/ less backing == less value per note). They introduced the money much faster than the Fed has, thus giving us a better exchange rate.</p>
<p>3)Lower trade deficit has kept money in the country this year.</p>
<p>4)Crashing commodity prices and stock prices eliminating paper wealth backed by no productivity, only speculation.</p>
<p>5)The real estate market tanked. When that happened, all those toxic loans that foreclosed eliminated alot of commercial money from the money supply. Contracting money supply means more value per note. Banks are also more hesitant to give out loans, thus stagnating new money creation. The price of homes MUST come down and adjust back to the CPI.</p>