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Feb. 2nd, 2008 07:29 amHappy birthday,
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DOLLAR’S FUTURE The dollar may gain a bit against other currencies in 2008, Bloomberg Markets reports, but its long-term prospects are bleak. The days when the dollar was strong — both in terms of purchasing power and prestige — may be past.
“Economists say the currency, which has declined in five of the past six years against the euro, is caught in a downdraft as investors pour into Asia, prompting a tectonic shift in economic power from the U.S.,” James G. Neuger and Simon Kennedy wrote.
In 2007, the Chinese yuan climbed 6.9 percent against the dollar, and the Indian rupee gained 11.9 percent.
In the short term, the dollar may gain, though.
“Deutsche Bank A.G., the world’s largest currency trader, predicts the dollar will rise at least 5 percent in 2008 versus the euro,” the authors wrote, but they quickly added that “longer term, the slowing U.S. economy — hurt by a banking and consumer credit meltdown that’s only getting worse — will weigh heavily on the dollar.”
Economists and academics quoted in the article raise the possibility that someday soon the dollar will no longer be the world’s most dominant currency. More