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Entries in US Dollar (7)

Monday
Feb202012

Eurozone's Effort to Save Greece Could Weaken US Dollar

Michele Tantussi/Bloomberg via Getty Images(WASHINGTON) -- As euro-zone finance ministers continue to deliberate about a second big bailout for Greece, many investors seem optimistic about the progress of the talks.

But any measures to save Greece from the verge of default could lift financial markets but weaken the U.S. dollar, possibly affecting U.S. travelers.

Nick Bennenbroek, head of currency strategy at Wells Fargo, said the outlook for the U.S. dollar is mixed. Getting closer to a deal would lead to a boost in emerging currencies and some of the major currencies, such as the Canadian dollar.

On Monday morning, the euro rose to a one-week high and by mid-afternoon it was $1.32 to the  U.S. dollar.

Euro-zone finance ministers are still deliberating in Brussels over whether to agree to a second, €130 billion, or $171.5 billion, bailout plan for Greece. Martin Koehring, economist for the Economist Intelligence Unit, said talks are unlikely to conclude before the early hours of Tuesday. Without the bailout, Greece faces the prospect of defaulting on a €14.5 billion, or $19.1 billion, bond redemption due by March 20.

“The fact that we’ve got zero to negative growth in Europe and the European Central Bank  will be potentially easing its monetary policy stance further” — by lowering interest rates or adding funds to their banking system — “does mean the euro will probably fall in the coming weeks or months against the dollar,” Bennenbroek said.

Also, U.S. economic numbers in the past few months, such as the falling unemployment rate, have boosted the U.S. dollar against the euro.

Travelers could also see marginal changes in exchange rates.

“I wouldn’t completely dismiss the relevance for those considering international travel,” Bennenbroek said, considering an estimated 5 cent increase in the Canadian dollar relative to the U.S. dollar in the next several months.

He said if U.S. stock markets continue to strengthen, the dollar would probably fall against the other currencies, such as the Mexican peso.

John Bowler, economist at the Economist Intelligence Unit, said he expects the U.S. dollar to weaken further.

He said the dollar had weakened against the euro since the start of the year as investors have regained their taste for risk, triggered by the injection of €500 billion by the European Central Bank into euro zone banks in late December.

“As long as risk appetite remains strong, the dollar is likely to weaken further,” Bowler said. But “any shock, such as a disorderly default by Greece, would interrupt this trend and send investors back into the safe haven of the dollar.”

Koehring said allowing Greece to default would cause major losses among European banks and could raise fears among investors that Portugal or Cyprus — or both — could be next, potentially raising the need for further bailouts of other highly indebted countries.

Copyright 2012 ABC News Radio

Wednesday
Oct262011

Will the Buck Stop? Coins Replacing Dollar Bills Could Save US $5.6 Billion

iStockphoto/Thinkstock(WASHINGTON) -- The super-committee charged with cutting trillions of dollars from the U.S. debt by the end of the year may be able to find at least one relatively small-change solution in their wallets: replacing the dollar bill with the dollar coin.

The controversial move would phase out paper bills and replace them with a new $1 coin, increasing production costs at first but saving billions in the long term, USA Today reports. Groups on both sides of the issue are voicing their opinions, with the Americans for George claiming they prefer the paper bill, while the Dollar Coin Alliance say saving money is preferable.

The Government Accountability Office, which issued a report on the cost-savings of a currency switch earlier this year, said that because coins outlast paper currency (which survive about 42 months), the switch would save about $5.6 billion over 30 years.

Lobbyists and industries with ties to the money-making industry are also weighing in. Massachusetts Sen. John Kerry -- who sits on the super-committee --has introduced a bill to do away with dollar coins (the current Susan B. Anthony versions).  Paper for U.S. currency is made by Massachusetts-based Crane & Co.

On the flip side of the coin, mining interests and states that have heavy mining industries are pushing for the coins to become the standard.  Former Arizona representative Jim Kolbe, who started campaigning for dollar coins in 1986, is now honorary chairman of the Dollar Coin Alliance and is pushing for the country to “update” its currency system, USA Today reports.

One obstacle to the money-saving move, however, could come from Americans’ dislike of using dollar coins, at least the ones now available.  Currently, billions of dollar coins that are not used are sitting in storage facilities at the U.S. mint, according to a report by ABC News’ Jonathan Karl.  By 2016, the dollar amount of coins in storage could grow to more than $2 billion.

To store all the unused coins, the Federal Reserve told Congress they will need to spend $650,000 to build a new vault in Dallas to hold them.  Shipping the coins to the new secure facility will cost an additional $3 million.

Copyright 2011 ABC News Radio

Wednesday
Jul272011

US Dollar Hits Three-Month Low in Asian Markets

Photos.com/Thinkstock(TOKYO) -- In a sign of growing concerns over the U.S. debt crisis, the U.S. dollar index fell to a three-month low Wednesday in Asian markets.

The dollar fell to a four-month low against the Japanese yen, while marking a record low against the Australian dollar.

A board member for the Bank of Japan said failed talks in D.C. could have serious effects on Japan's financial system.  He added that he expects the finance ministry to look at whether to intervene.

The U.S. government is projected to default unless a deal is reached before next Tuesday's deadline

Copyright 2011 ABC News Radio

Saturday
May282011

US Dollar Continues Two Week Low over Sour Speculation

Photos.com/Thinkstock(WASHINGTON, D.C.) -- The dollar continued its two week descent as reports suggesting the U.S. economy's economic recovery may be hitting a plateau.

The Swiss franc rose sharply this week, benefiting from the supposedly stagnating dollar and worries over Greece's debt crisis. The Dollar Index dropped from 75.435 last week to 74.758.

New Zealand's currency grew stronger after the China Investment Corp. announced plans to buy kiwi bonds.

Copyright 2011 ABC News Radio

Monday
May022011

Stock Market Futures Up Amid News of Bin Laden's Death

Comstock/Thinkstock(NEW YORK) -- Following news that Osama bin Laden was killed by U.S. Special Forces in Pakistan Sunday, global stock markets are on the rise Monday.

The dollar has strengthened and oil prices have dropped below $113 a barrel, easing off two-and-a-half year highs.

Overseas, Japan's Nikkei index closed up 1.6 percent overnight.  It is now at its highest level since the March 11 earthquake and tsunami that struck Japan.  European markets are also up.

Meanwhile, in the U.S., stock futures are making more gains and are poised for an up opening on the first trading day of May.  April was the best month of the year for stocks.  Year to date, the Dow is up nearly 11 per cent.

Copyright 2011 ABC News Radio

Friday
Apr152011

Is Gold the New Black? States Look to Bring Gold Standard Back

Stockbyte/Thinkstock(SALT LAKE CITY) -- Starting in May, Utah residents will be able to shop in a currency other than the dollar -- gold, something that hasn't happened since 1933.

Utah became the first U.S. state last month to recognize gold and silver coins minted by the federal government as legal tender.  More than a dozen other states are considering similar measures, and are expected to follow Utah's example.  The move, proponents say, is caused by declining faith in the U.S. monetary system and concern about rising inflation.

The gold standard, a monetary system in which the dollar is valued against a certain weight of gold, lasted until the Great Depression, when the Federal Reserve confiscated gold held by the public.  President Nixon abolished the conversion of dollars to gold at a fixed rate in 1971.

It doesn't literally mean people would pull out gold coins at the cash register.  Instead, the Federal Reserve would be required by law to make their notes redeemable for gold and hold gold coins and bullion as reserves.  The printing of U.S. dollars would also be weighed against the value of gold.

The last time the gold standard was seriously considered was during President Ronald Reagan's administration.  Reagan appointed a commission in 1981 to study the role of gold in the U.S. monetary system, but the group mostly came out against it -- except for two members, including now-Rep. Ron Paul, R-Texas, a champion of the Tea Party movement.

Despite continued calls by proponents like Paul to consider the gold standard, it had mostly stayed under the radar, until now.

The Tea Party's growing momentum and rising inflation is giving new life to the issue, as evident in Utah.

Copyright 2011 ABC News Radio

Wednesday
Nov102010

Obama Urges G-20 Leaders to Back Plans for US Economic Growth

Photo Courtesy - Getty Images(JAKARTA, Indonesia) -- Amidst criticisms the U.S. is trying to ‘devalue its way back to prosperity,’ President Obama wrote a letter to G-20 leaders arguing the world needs the American economy to recover, adding the U.S. dollar's strength and global economic health hinge upon it.

“A strong recovery that creates jobs, income and spending is the most important contribution the United States can make to the global recovery,” President Obama wrote on the eve of the G-20 summit in Seoul, South Korea.  “The dollar’s strength ultimately rests on the fundamental strength of the U.S. economy.”

Federal Reserve chairman Ben Bernanke’s plan for “quantitative easing” -- which essentially means pumping $600 billion into the U.S.  economy through the purchase of Treasury securities -- has met with criticism from fellow G-20 nations.

At the International Finance Forum in Beijing, deputy governor of the People's Bank of China Ma Delun said this week that the Fed plan  "may add risks to the global economic imbalance, put pressure on emerging markets to adjust their international balance of payments and could also stir the formation of asset bubbles, all of which require our vigilance.”

And German Finance Minister Wolfgang Schaeuble in an interview with Der Spiegel called the move “clueless” and said he has “great doubts about whether it makes sense to pump unlimited amounts of money into the markets.  There is no shortage of liquidity in the U.S. economy.  I can't see the economic argument for this move."

Schaeuble said “it doesn’t add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank’s printing presses, artificially lower the value of the dollar.”

Asked in India if the move by the Fed may look hypocritical to other world leaders, President Obama said “the Federal Reserve is an independent body.  It doesn’t take orders from the White House, and it’s important as a policy matter, as an institutional matter, that we don’t comment on particular Fed actions.  I will say that the Fed’s mandate, my mandate, is to grow our economy.  And that’s not just good for the United States, that’s good for the world as a whole.”

Copyright 2010 ABC News Radio







ABC News Radio