Reasons and Consequences of the Fall of the Dollar

Reasons and Consequences of the Fall of the long horse The value of the US sawhorse has since the arising of March this year pass onen drastically. Economists and investors worldwide name attempt to explain the cause of this all-time low of the American currency. The results of the fall are many and complicated. I will in the undermentioned outline the main reasons of the fall, and also try to state a few of the ends. The first, most obvious reason for the fall, is Bill Clintons $20 billion plan to help Mexicos economy, which hasnt seemed to help at all. Investors faith in the Dollar immediately diminished, and Dollars were put on the food securities industry in huge quantities, resulting in prices going down. The Mexico incident, is though, only the assoil of the iceberg. The Dollar has been decreasing since 1985. This trend has been a direct consequence of the Plaza agreement, which involved agreement between leading industrial countries to force the Dollar down. This, and the fact that the Americans always have had a problem with current account deficit, have had a nix effect on the Dollar. Another reason why the Dollar has had a steep negative gradient, is that USA has been supplying the market with more Dollars than demanded, naturally decreasing Dollar value.

This trend has been a consequence of the pension and mutual fonds investing in afield equities and bonds. The consequences of the last months fall, are many. One of the biggest, will be the change magnitude US export. Foreign investors do not want to look across a chance like this one, so they buy American products, in Dollars, at bargain prices. Especially the Japanese have proven this prediction right. Furthermore, a quite serious consequence of the record-breaking low, is the crack of the European exchange-rate mechanism (ERM), which is beyond the celestial orbit of this paper *and my Knowledge) to explain. Important to the Deutch-mark, is the transfer in faith from the Dollar to the D-Mark, since... If you want to get a full essay, order it on our website: Orderessay

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