Currency rates: $ €₤ zŁ. The interrelationship.

Polonius3Threads: 1,005 Posts: 4,833 Joined: Apr 11, 08 ♂	Oct 16, 10, 16:26 #1
Can anybody on PF simply and concisely explain the interrelationship of the above currencies as they affect exchange rates. I believe Wall Street, the barrel price of oil and other factors also have some bearing on this.

delphiandomineThreads: 42 Posts: 9,954 Joined: Nov 25, 08 ♂ [Suspended]	Oct 16, 10, 21:40 #2
Polonius3: Can anybody on PF simply and concisely explain the interlationship of the above currencies as they affect exchnage rates. I believe Wall Street, the barrel price of oil and other factors also have some bearing on this. It's what the market dictates.

♂

Edited by: ShawnH Oct 17, 10, 14:44 #3

It really depends on what is going on in each of the countries as an individual compared to the other countries mentioned.

I won't pretend to be an expert in economics, but recently it was pointed out that the US, Canadian and Australian dollars were all converging at parity. For the longest time, the US Dollar was king and was worth anywhere from 1.50 to 1.30 Canadian dollars. But due to several factors like interest rate policies in individual countries (attracting foreign investors) forecasts of economic growth, jobs data, current and future commodity prices etc. the Canadian and Aussie dollars have surged.

Both CA and Aus economies are heavy on resources (mining, oil, forest products etc) and are suppliers to Asia, where the boom continues to feed a growing middle class in China, India and other nations. So, consequently their "net value" is on the rise. Compare that to the US where the housing crisis, unemployment rate and national debts / operating defecits has decimated the nation's consumption abilities, and one would easily see where the money is flowing to, and the effect on currency evaluations. Who want's to bet on a lame horse?

Also, you have to look at who holds a great deal of American Debt. The Chinese have been snapping it up over the years, but if they get antsy, they can (and likely will) dump it for something a little better - causing the USD to fall further.

Additionally, the US may want to have a "low" dollar in order to make US goods more affordable around the world, thus putting Americans back to work.

I am sure somebody closer to the situation in PL could point out why the zł is a rising star compared to the US dollar....

So, no, there is no simple answer.....

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