US Dollar depreciates against all the major currencies of the world
Economies around the world have now started fearing that such a fall may be harmful for their exports. Japanese Yen at 15 Year high. US exports may benefit from this fall of Dollar.
Loss of one is gain of another. Dollar is loosing its value against all the major currencies of the world. Japanese government has raised concern over the historic rise of Yen against the US Dollar. It will be interesting to see when Bank of Japan would intervene to check this rise.
Japan is predominantly an export oriented economy and an appreciation of its currency to such a extent may play havocs on its economy. Japan is not the only sufferer, all the major currencies have appreciated against Dollar including currencies of emerging economies which may weaken the export of those countries. Weak emerging markets may damage the exports of Japanese good. Hence, the concern about Yen appreciation is eminent.
Dollar Index has dropped substantially and is currently at lows of 14 April 2010 at 80.7. This steep fall in value of Dollar index is caused by recent news about US economy loosing steam. Though the corporate earnings have been above expectation all across the globe but US consumers are still not much confident about the recovery. Q2 growth figure of 2.4% was abysmal and investors are looking for safe heavens other than dollar now. On the other hand Japanese economy grew at 5% in Q2.
Yen was trading at 85.30 which was close to November highs and very close to 15 year high of 84.42. Japanese Nikkei 225 dropped 2% amid concerns about rise of Yen.
Out of all these negatives there is one good news that US may gain on its export as dollar depreciates and help ‘balancing’ its balance of trade.