Dollar is very strong and major currencies are losing a lot against Dollar with no obvius reason. In 2000 when dollar was strong there were a strong reason of Dot com Boom, but what is reason now can any one tell,
UK Pund is 6 ys low against dollar and lost 20% value as Compared to its value in July,
Candian Dollar is worst loser, it lost about 30% Value as Comparted to last year aveage.
Euro is also down 25% as compared to its value in July.
Goto yaho finance and currencies and see these horrible graphs
I feel there are more than 50% investors from Canada UK and Europe so they must have not lost a lot investing in Pakistan, For eample Canadian Dollar holders are getting almost same [63 vs 64] Pak rupee against their Currency what they were getting one year Back in 2007.
This situation will directly effect Dubai realestae Market, Recently most of buyers in Dubai are European mostly from east europe, They have Booked on highest prices, and now they will have have to pay 30 to 35% More if Dollar stays here [Dollar always = 3.675 UAE Dhs].
If you are not losing and have some interest in Global economics, This is life time experience to see watching this economic strom.
Dr.Habeel replied on Saturday, October 25, 2008 08:58 AM
I don't think there will be a much impact on DUBAI Real estate because it is a different kind of market.Recently The Govt. has given unlimited guarantee to all depositors.This kind of bold support you will not find anywhere in the world.USD/Dirham rate is fixed no volatiliy.Due to various steps by the Govt.to encourage/support investors now uae is a heaven for investors.
Regards |
Pardesi, Jeddah replied on Saturday, October 25, 2008 09:24 AM
The obvious reason for correction in US$ against other major currencies is that the disposable income everywhere has shrunk forcing to maintain daily consumption items; bulk of which are traded in US$. thus US$ is in demand again.
There are also possibilities (based on unconfirmed news) that international currency giants (in and out of US Govt.) are also gambling on US$ these days instead of Gold/oil/real estate/other currencies to artificially raise the value of US$. The argument is supported by analysts that recession in US economy/soaring loans on US Govt. & major institutions/War expenses/High costs of production as compared to cheaper imports cannot sustain the high value of US$ for a longer period. |
Jameel replied on Saturday, October 25, 2008 10:46 AM
So Perdesi in your opinion, one should convert some of Capital to UK pound?? as I remember I bought UK Pound in 1999 in 6 UAE Dhs and now it is again to 5.85, In between it had been as high as 8.1 UAE Dhs. In last 10 years at least 9 ys UK pound was expesive than this. i guess best thing may be to wait for US elctions, If Obama wins the US dollar will surge even more but should not be able to sustain for long time. As real economic problems will stay, to decrease soaring deficit US will have to weaken the dollar.
I think even now dollar is overvalued but trend will continue for some more months. |
Reader replied on Saturday, October 25, 2008 06:33 PM
There could be different logical explanations for the events happening these days. But Jameel has correctly described it as 'economic storm' and in storms, panic sets in. This is what is happening now. Its just chaos and perceptions/preferences change quickly. People are trying to find refuge some where. That is why one day stock markets move up 7-8% and fall 10% the next day. Actually no one is sure where to be now. |
Khan replied on Saturday, October 25, 2008 11:29 PM
Dollar is strong for a reason and a good reason.
Traders are fleeing the Euro b/c the EU’s credit crisis problems are even worse than what’s going on in USA. America screwed up but so did a lot of other countries. Some people are speculating that the Euro/USD rate will go as low as 1:1. There is enormous pressure on the European Central Bank to lower interest rates in the next few months.
Also there is believe that when everything is sattled and this global financial crises come to an end. USA will be the first to recover from this crisis, making US dollar more attreactive.
For short and medium term US Dollar is will rise against most other curriecies. |
Naveed Yaseen replied on Sunday, October 26, 2008 04:54 AM
I believe US dollar is over-valued.
In last few years it has lost lot of core in several different aspects like,,,
- trade deficit
- currency injection (politely said 'liquidity injection')
- official public debt
- foreign ownership US liabilities (like US dollars and securities)
- valuation meltdown
- dominance flip
The last factor is especially important. Dominance usually flips within a few stable states, say head or tail, with no stable continuum in-between.
United States, even in most optimistic scenario presuming it gets the speculated leadership that can successfully handle ongoing confrontations, it will still not regain the dominance in global political and economic affairs it had ten years ago. It may still continue to be a considerable power, but it will not be alone super-power anymore.
That is because some policies of last few years have done some irreversible damage. And the repairable damage, presuming the best handling by new leadership, will still take some time to repair.
And that is also because global political and economic environment today is different than ten years ago. And in coming ten years this difference would only increase. |
Pardesi, Jeddah replied on Sunday, October 26, 2008 11:20 AM
This discussion reminds me concerns in early 90s by some analysts predicting adverse global situation from 2015 onwards.
By now you (Mr. Jameel)must have reached to the conclusion that its not the question of Sterling or Euro rather revert to the principle, not to put all eggs... & another priciple, not to trade in currency for the sake of gains; maintaining value of money by keeping your accumulated cash in FCY for future investment is something outrightly different vs. trading in currencies for gains & should not be mixed-up with each other.
To strengthen what Naveed said, political & economic system is based on the nation's behavior. Skepticism & suspicions give negetive impact (as in case of Pakistan rumours are spread through ficticious SMSs). Now with the change in believes over free-market economy people are calling their volatile investments back causing loss of PRODUCTIVITY. Sarcozy is calling for Govts. intervention but I am still doubtful for how long Govts' artificail respiration will sustain. |
KAR replied on Sunday, October 26, 2008 01:33 PM
The dollar will continue to be strong against all the major currencies for a simple reason - Oil. As you all are aware that global trade of oil is done only in dollars so most of the nations especially emerging nations keep their imports to bear minimum except for oil imports. Therefore, the currency they require the most during downturns is dollar as compared to any other currency and gold. Check the historic value of USD vs. Gold, GBP and Oil; USD is always inversely proportional to those.
In my opinion the same trend will continue for a year or so till the current fiscal crisis is behind us. In recession it has nothing to do with the state of American economy but the currency required most for trading. However, for some reason if OPEC decides to switch to other currency (which by the way Iran and Venezuela are trying for some time) USD will be worth nothing.
Re Dubai property market, check out this article on arabianbusiness.com:
http://www.arabianbusiness.com/535940-dubai-abu-dhabi-property-sales-grind-near-standstill |
Arif replied on Monday, October 27, 2008 01:31 AM
Naveed,
You are either an ideologue or you read a few dollar bear economists and made a summary here. Nobody benefits from statements such as "dollar is over valued" unless you specify when and how much will it correct. BTW, I didn't see you posting a message that Lahore Real Estate is over priced in ? Or did you say China/Pakistan/Indian stock markets are over priced or that Yen is under priced in last few years? Dollar/Yen have been an easy short trade for hedgies for a long time to a degree where Euro/Gold/Oil all became over valued. Part of dollar strength is because of natural regression back to fundamental value of dollar. US currency at core is backed by its economy and like it or not, it is the biggest economy in the world and that is why Oil is traded in dollars because the biggest economy is the biggest consumer in the world.
In all crisis, losers keep looking back at what investments previously had great runs assuming that next boom cycle will be about same investments. It wouldn't. This is the official death of easy credit/money and with it, you have a real estate slow/flat cycle that may last 5-10 years. The days of dollar/yen carry trade for leveraged investments in commodities, real estate, emerging markets are over. The next era is going to be about green technology especially if Obama is elected. People are fixated over Oil/Plots/Gold/Euro which means these investments are still saturated. |
