The dollar is sliding after the Fed announced it will buy hundreds of billions of dollars of U.S. government bonds from consumers this year in an effort to further stimulate the economy.The euro has jumped to $1.4101 from $1.4036 late Tuesday, while the British pound is rising to $1.6111 from $1.6024.The dollar has lost earlier gains against the Japanese currency, trading at 81 yen versus 80.68 yen late Tuesday, after being worth as much as 81.52 earlier Wednesday. The dollar has been under heavy selling pressure in the past two months because investors expected the Fed's move. By buying bonds, the Fed would drive down interest rates and trigger more borrowing and spending. But the prospect of lower interest rates makes a currency less attractive to investors. What kind of impact do we think this will have on U.S. trading? and Can it stimulate the economy at the same time?
1 comment:
The effect on trade should be a positive one because as the dollar decreases exports should increase. This alone should stimulate the economy because there will be a higher demand for domestic goods on the international level.
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