Is the dollar headed up?

[cobalt1999]

www.telegraph.co.uk/finance/financetopics/recession/4939796/Europes-banks-face-a-2-trillion-dollar-shortage.html


Europe’s banks face a $2 trillion dollar shortage

European banks face a US dollar “funding gap” of almost $2 trillion as a result of aggressive expansion around the world and may have difficulties rolling over debts, according to a report by the Bank for International Settlements.

<snip>

The report, entitled “US dollar shortage in global banking”, helps explain why there has been such a frantic scramble for dollars each time the credit crisis takes a turn for the worse. Many investors have been wrong-footed by the powerful rally in the dollar against almost all currencies, except the yen.

British banks had accumulated a dollar "funding gap" of $300bn by mid 2007. The latest BIS data up to the third quarter of 2008 shows that this exposure has been trimmed by “deleveraging” but it still largely hanging over the UK financial institutions.

Swiss banks had a funding gap of $300bn at the onset of the credit crunch, an extremely high figure relative to Swiss GDP. German banks were $300bn short, and Dutch banks were $150bn short. Belgian and French banks were neutral.

<snip>

Simon Derrick, currency chief at the Bank of New York Mellon, said the implications are obvious. “The global bullion of the last eight years was funded on dollar balance sheets, so the capital destruction we’re seeing leaves banks starved for dollars. Dollar is clearly going to appreciate a lot further,” he said.
.



A strong dollar may not be good for the U.S leading to deflation and bigger trade deficits.

[notesdev]

1. some notes

1 - Deflation is already here. Anything done in the name of 'preventing deflation' is most certainly intended for some other purpose whose real motive is being hidden from the public.

2 - The dollar has been rising for ~8 months already after hitting lows of ~88Y/USD and 0.63Euro/USD. Now at 99Y/USD 0.79Euro/USD.

3 - The reason why the dollar is rising is because we're in much better shape than is the rest of the world, even now.

[cobalt1999]

2. How high will it go though?

Will it get to 1.25Euro/1.00USD?

[notesdev]

3. Maybe

There's really no way to tell... the questions that will move the currencies these days are political and no longer economic. An easier question to answer is whether the Euro will continue to exist at all. Personally I don't see the Euro in existence 10 years from now, and the event may happen much sooner than that.