The £ is falling, buy why isn't the $?

OpenToSuggestions · 21 Nov 2008 at 13:19

As title, as we all know, the pound is worth much much less worldwide as it was a year ago.

Question is, why isn't the dollar falling? I thought they are/were in a bigger mess than us!
I thought most of our banks were linked to america anyway.

RaohNS · 21 Nov 2008 at 13:20

the dollar isn't weakening because countries that are undergoing the economic drop are starting to invest in the dollar.

Either way don't forget the US economy is over $13.8tr (10-11tr of which is debt).

Steve2000 · 21 Nov 2008 at 13:21

America isn't as hard hit as we are. Their size can be a large factor in resistance to a failing economy.

I have two brothers who've lived over there for years (one in NY one in Indianapolis) and they both reckon that the "credit crunch" is virtually non-existent over there. They aren't "feeling the pinch" anywhere near as much as we are.

Yamahahahahaha · 21 Nov 2008 at 13:21

The British economy is knackered and the US economy fell a year or so before ours.

They've had the worst of their decline, we're only starting ours.

Solari · 21 Nov 2008 at 13:27

I was wondering whether you can have a UK based account in Euros rather than GBP. Got a bad feeling the GBP could really tank soon

Ben M · 21 Nov 2008 at 13:27

Yamahahahahaha said:
The British economy is knackered and the US economy fell a year or so before ours.

They've had the worst of their decline, we're only starting ours.

and europe is next.

Solari · 21 Nov 2008 at 13:29

Ben M said:
and europe is next.

Will they really be hit as bad as us, though (or more to the point, will the Euro be hit as hard as Sterling). The ECB is actually independent unlike the BOE which bows to Govt pressure... might help?

megakid · 21 Nov 2008 at 13:35

In times like this it isn't how hard hit the economy is - everyone is in a bad situation. It's about interest rates and in times where cuts are happening across the globe, the USD typically always does well since a lot of the world's currencies are pegged to the USD (particularly Arab countries since oil is denominated in USD)
Another big factor is that the USD is the world's main reserve currency and in times where countries want to build reserves, they buy USD (increasing demand and preventing a massive USD valuation drop)

EDIT: that doesn't make much sense now I read it through but hopefully you catch my drift... look at the USD wiki article for more details

NickK · 21 Nov 2008 at 13:43

Basically everyone should buy US dollars..

[DOD]Asprilla · 21 Nov 2008 at 13:43

A lot of the money that is leaving the UK originates from the US and that's where it's going back to. As a result US investors are getting rid of their sterling assets and buying dollar ones. Lots of people swapping sterling for dollars is keeping the dollar price afloat whilst hurting the pound.

As the move slows the dollar may start to decline against the pound.

platypus · 21 Nov 2008 at 13:44

Bloody dollar :/.

eXor · 21 Nov 2008 at 13:55

Solari said:
I was wondering whether you can have a UK based account in Euros rather than GBP. Got a bad feeling the GBP could really tank soon

You can. Open an account with a forex broker and buy some micro lots of whatever currency you want. Of course, if you're wrong.....

a1ex2001 · 21 Nov 2008 at 13:56

Solari said:
Will they really be hit as bad as us

The pound actually hasn't been that badly hit, it was ridiculously over valued at $2 and has noe retunred to a much more normal level if it get's down towards 1 to 1 then it's taken a real kicking.

likwid · 21 Nov 2008 at 13:56

NickK said:
Basically everyone should buy US dollars..

Everyone should search for peter schiff videos on youtube. He's been predicting exactly the current crisis in the US for years and according to him things are going to get way, way worse.

http://digg.com/search?s=peter+schiff&submit=Search&section=all&type=both&area=promoted&sort=most

Mr^B · 21 Nov 2008 at 13:58

What makes you say the £ is falling?

If it's falling against the dollar, then the dollar is rising...you can't really have one without the other!

pingwing · 21 Nov 2008 at 14:44

Solari said:
I was wondering whether you can have a UK based account in Euros rather than GBP. Got a bad feeling the GBP could really tank soon

Go to the Republic of Ireland.... (most the banks down there oporate in NI which sort of fits what you were asking.... as you can have a sourthen account in euros....) wouldnt want too though, the euro is almost at 1:1 with the pound so you'll be loosing a shed load of money right now (my flat mates sending up loads of euros soon with the nice exchange rate, well for him)

Energize · 21 Nov 2008 at 14:48

Mr^B said:
What makes you say the £ is falling?

If it's falling against the dollar, then the dollar is rising...you can't really have one without the other!

Sure you can, if the dollar remains the same against the euro but better against the pound then the pound is falling rather than the dollar rising, saying the dollar is rising is implying some sort of economic increase.

aardvark · 21 Nov 2008 at 14:49

the dollar is the world reserve currency so it has a lot of strength compared to the other currencies. Also, a lot of trades/options have to be closed in dollars so people are being forced to buy them to close their positions.
but its a temporary strength only and not based on strong fundamentals, so i would expect the dollar to drop significantly next year.

Azagoth · 21 Nov 2008 at 14:50

I don't know, I'm no economist. Could it be all the cocaine that's allegedly ingrained on the dollar bills keeps it high?

eXor · 21 Nov 2008 at 15:36

Azagoth said:
I don't know, I'm no economist. Could it be all the cocaine that's allegedly ingrained on the dollar bills keeps it high?

1 out of 10 for effort.