Weakening of the US Dollar



Weakening of the US Dollar

Federal Reserve Chairman Ben S. Bernanke in the congressional testimony announced its plan to print money to buy Treasuries and mortgage bonds. The announcement sparked a worldwide concern. In the Global context, the Dollar will lose its demand. At the domestic front, such an action will accelerate inflation.

A Strong US Dollar

This is contrary to the general opinion is that Fed should begin to reduce the amount of money it pumps into the financial system through so-called quantitative easing to strengthen the Dollar.

It is also contrary to the statement made by U.S. Treasury Secretary Timothy Geithner in an interview with Al-Arabiya television that:

The administration of President Barack Obama favors a strong Dollar and expressed confidence the greenback will remain the main reserve currency.

Fed’s Balance Sheet

The deficit of Fed’s Balance sheet will increase. Now, the size of the Fed’s balance sheet is at $2.18 trillion yen on May 20, compared to $900 billion before the collapse of Lehman Brothers Holdings Inc. in September.

Global Sentiment Against the US Dollar.

Further quantitative easing will weaken the U.S. dollar weaken against the euro, the yen and the Australian dollar as global sentiment turns against the US Dollar.


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  8. Reetha (8 comments.) says:

    nice updation.Its a very serious problem that Dollar will lose its demand…

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  10. Ptha (1 comments.) says:

    Wll this weaking of USDOLLAR will create a big boom in stock markets??, Wish to know more updates about currency movement in future

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