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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

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    Why does the dollar's decline raise the concern of central banks around the world?

    Rocky
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    banks - Why does the dollar's decline raise the concern of central banks around the world? Empty Why does the dollar's decline raise the concern of central banks around the world?

    Post by Rocky Fri 02 Mar 2018, 9:35 am

    Why does the dollar's decline raise the concern of central banks around the world?






    2018/03/02 15:16


    (Encyclopedia of this Day News | Iraq News ) - From - forbade copper:

    Mubasher: Big fears raised by the decline in the US currency for more than a year, which is of concern to monetary policy officials in a number of countries in the world.

    For the US currency, which is known for strong performance, its decline against the euro by 14.1% last year, and 1.9% since the beginning of this year is not a simple thing.

    The ECB's latest minutes said there was wide agreement among policymakers at the bank on concerns over recent exchange rate developments.

    The report said that the weakness of the dollar "is unclear reasons", with the US situation regarding the strength of economic data and the prospects for monetary and monetary policies there.

    The European Central Bank stressed the need to adhere to recognized exchange rate agreements, which explicitly exclude devaluation of the competitive currency.

    This is not the first time that European monetary policy makers have denounced the green card. Bank President Mario Draghi said last month that exchange rate volatility was a source of uncertainty.

    This came at a time when the European currency rose significantly against the dollar, as the euro rose last month, the highest $ 1.25, the highest level since October 2014.

    Draghi said that the ECB does not target a specific exchange rate for the single currency, in order to maintain the growth and stability of prices.

    The comments of "Mario Draghi" in response to what the US Treasury Secretary said at the time, said, "The weak dollar is good for the US economy."

    He also said he did not care much about the weakness of the dollar in the short term, but he was confident of the strong fundamentals of the currency in the long term.

    Although Stephen Munchin retracted these remarks, saying that the statements were "taken out of context," noting that they were currently expressing the currency, investors took them as evidence of the US position on the performance of the dollar.

    With European concern, Japan's finance minister said the yen's appreciation for the time being is not so acute as to warrant intervention.

    The Japanese official argued that the currency does not rise or fall suddenly.

    Since the beginning of the year, the yen has gained 5.2% against the dollar.

    Concerns are evident in the trade deficit. 

    With many countries making huge gains from the rise of the dollar and the depreciation of its currency against it, the countries themselves have been affected by the reversal of the picture.


    This is evidenced by the countries famous for large exports, such as China, Japan and Germany.

    In 2017, Japan's trade balance surplus fell by 25.1 percent to 2.9 trillion yen ($ 27.1 billion).

    The decline continued at the beginning of this year as Japan's trade surplus with the United States fell by 12.3% YoY in January.

    The trade deficit in the world's third-largest economy rose by 13.6 percent in the same period.

    China's trade surplus with the United States fell to $ 21.8 billion in January from $ 25.5 billion in December.

    China's total trade surplus with the United States stood at 135.8 billion yuan ($ 20.3 billion) in January from 361.9 billion in December.

    In Germany, the trade balance surplus fell in 2017 for the first time in eight years, at 244.9 billion euros last year, against 248.9 billion euros in 2016.

    The decline in the value of the US currency and the rise in its major counterparts, this affects the performance of stock markets as the shares of exporting companies decline, and the impact of the decline of the US currency is more evident in Japan, which depends on exports significantly.

    Since the beginning of this year, Japan's Nikkei has fallen 3.1%.

    When Japanese stocks rose in the surge in global stock markets at the end of January, warnings increased that the situation would not continue as the Japanese currency rose.

    Heidoki Suzuki, head of investment market research at CBA, warned that Japanese equity markets are rising on the assumption that the currency will not rise sharply.

    He said the situation could change as the yen rose to its highest level since September against the dollar, which followed when the Nikkei fell from a 26-year high as the yen hit its highest level since November 2016. 

    Analysts said that despite the recovery of US stocks at the end of February, but Japanese stocks were unable to participate in these rises, with the yen against the dollar to 106 yen.

    Although the United States and its rival countries have been locked in a 30-year formal deal to prevent currency manipulation to protect the trade balance, the situation is now unclear on what will end.

    The agreement was known as the Plaza Agreement in 1985 between France, Germany, the United States, the United Kingdom and Japan for exchange rate manipulation.

    The aim of the deal was to correct trade imbalances between the United States, Germany, the United States and Japan, but the biggest focus was on correcting the trade balance.


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