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Crisis

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2008.10.23 | 02:21
Coordinates: Absurdistan, Central Europe

Could someone please explain to me, that if there’s a financial crisis all over the place, but it started in the USA and they still aren’t feeling well according to the stock markets and all kinds of news bits I hear…

How the heck is it possible that the USD is strengthening against pretty much every other currency?

So much, that though they were on par with CAD a little while ago, it’s about 1.25–1.30 CAD to one USD now.

And of course I have to live in one of the, what, three countries that get trampled over in this. USD from 140 to 210 HUF a piece, EUR from 240 to 280 HUF a piece, GBP from 300 to 350 HUF a piece. Nice, isn’t it?

There go my plans of getting a laptop. Soon enough you can’t get rubbish for 200k if this keeps on going.

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Comments {13}

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from: anonymous
date: 2008.10.23 01:46 (UTC)
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Basically, as American hedge funds sell assets to meet client redemptions or margin calls, they liquidate their riskiest stuff first. A lot of it is located in other countries. So they sell the asset in local currency and then have to buy dollars to bring it home. The demand for dollars rises while the demand for other currencies decreases. Thus the dollar is up while most everything else goes down. Additionally, the dollar's tenuous status as the global reserve currency means that investors will still flock to it in times of trouble. The rise, however, will be limited to the beginning of the crisis. As things settle down, investors will evaluate the US balance of payments as well as the tremendous growth in public debt in the past few months negatively. At that time the dollar will decline again.

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