The effects of dollar depreciation.
Originally posted on the ForexFactory on May 2, 2008.
Originally Posted byÂ megamoI understand its easy to think that way, that if the dollar depreciates it doesn’t affect us really. But it really does, cause most of the goods purchased in America are imported, so when the dollar depreciates, it does affect you as you’re going to end up paying more for the things you buy as it costs you more to buy a benz, or corolla or what have you. The domestic inflation rate is more important, I understand, but they are all related, and you can’t buy the the bullshit numbers the BLS spits out nowadays to you anyway about inflation, because they constantly change on how they calculate it. You are paying 3.50 a gallon for gas, when i had my first car in 97, i paid 1.28, and thats just gas mind you. All this spills over into the economy eventually, its just business, someone has to pay for the cost, if US business paying 20 percent more to buy the same goods, the consumer ends up bearing that in the end..
I never meant to say that the dollar depreciating doesn’t affect us. What I mean is that even if the dollar depreciates substantially, the inflationary affect that it has is far less than what you would expect.
Some companies have hedged, will cut costs, increase efficiency and/or bear some brunt of the shift in the exchange rate in order to not lose their market share in the U.S.
Most of the inflation today is concentrated in food and energy prices, and these only make up a portion of consumer spending. There are plenty of products which are still dirt cheap which have not been noticeably affected by years of dollar depreciation. There is a lot of structural efficiency within the U.S. economy so the pass through effects to the consumer are not felt as strongly as in other countries.
|would be with the gbp as the Euro we know has been intervened above the 1.60 level|
Who intervened exactly? Central banks from the G7?
As far as I can remember the G7 just stepped up their rhetoric regarding “excessive forex volatility” , the didn’t actually become a market participant and started shorting EUR/USD