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Few Seeing Usual Benefits of Rising Dollar
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Issue
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Nov 11, 2008 10:44pm |
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| Category | News |
| Media | Newspaper - Washington Post |
| News Date | Sunday, November 2, 2008 04:00:00 AM UTC0:0 |
| Description | Normally, Americans Would Travel More and Imports Would Jump, but Caution Rules the Day
By Mary Jordan and Karla Adam
Washington Post Foreign Service
Saturday, November 1, 2008; Page A09
LONDON -- The value of the U.S. dollar has soared with unheard-of speed against many currencies in recent weeks, but the global financial crisis has altered the usual effects of such a spike.
Normally a rising dollar means more Americans traveling abroad and foreign countries exporting more goods and services to the United States. But this time, even though the dollar has gained about 25 percent against the euro and the British pound since early August, few analysts said they expect to see that happening anytime soon.
As Americans face recession and rising joblessness, fewer are tempted to take overseas vacations or buy more imported goods. "In an ideal world, the soaring dollar sounds wonderful" for British exports, "but quite frankly no one is buying anything from anyone," said Howard Wheeldon, senior strategist at BGC Partners in London.
At the same time, the speed of the climb has brought debt problems almost overnight to many struggling countries. Foreign governments and individuals who borrowed in dollars are finding that the corresponding rapid decline of their currencies against the dollar has made it harder, and in some cases impossible, to buy enough dollars to keep up loan payments.
The International Monetary fund's emergency talks, including those with Iceland, Hungary and Ukraine, have largely involved nations whose banks are facing huge amounts of unpaid debts that are driven in part by the mismatch of local currency income and foreign currency debt. Also, the euro has risen against Eastern European currencies. |
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