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Dollar Headed for Biggest Gains Since '81: Bankers

Greenback set for 17.1% gain against euro

By Jason Farago,  Newser Staff

Posted Jun 29, 2009 8:24 AM CDT
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(Newser) – The dollar is poised for its biggest advances in 28 years, according to Deutsche Bank, which predicts a 17.1% gain against the euro by the end of the year. Other banks polled by Bloomberg are similarly bullish about the greenback, which has just endured its worst quarter since 2002. Currently trading at $1.40 per euro, it should strengthen to $1.20 by year's end, according to Deutsche.

"You don’t have to bet on the recovery to be bullish on the dollar," said one trader. "If the situation stays as bad as it is, the dollar is a safe haven. And if the economy turns the corner, the US will be the first to get out of the recession."

Forecasters at Deutsche Bank predict a gain of 17.1% for the dollar against the euro by year's end.
Forecasters at Deutsche Bank predict a gain of 17.1% for the dollar against the euro by year's end.   (©bionicteaching)
One euro currently buys $1.40, after the greenback endured its worst quarter in years.
One euro currently buys $1.40, after the greenback endured its worst quarter in years.   (©bionicteaching)
The dollar may be poised for a comeback as the global recession wanes.
The dollar may be poised for a comeback as the global recession wanes.   (©a little tune)
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COMMENTS
Showing 3 of 8 comments
wwwonderer
Jun 30, 2009 4:47 AM CDT
But then how does the strong dollar affect the domestic housing market? Strong dollars mean what??? Increase in equity value? Stable tapering of price drops? I think that is the sector to watch a little more than the import export section. Or is it just me?
Snowleopard
Jun 30, 2009 3:57 AM CDT
That being said, a drop in the value of the U.S. dollar and a slight increase in the money supply might be good for the U.S. economy. The lower dollars means that it's more affordable for other countries to import American goods, and the increase in the money supply will hopefully counter the deflationary spiral, particularly in housing so that people aren't "upside-down" on their loans anymore.
Snowleopard
Jun 30, 2009 3:55 AM CDT
SPH: His point was referring to the most fundamental truth in economics - supply and demand. You increase the supply of something and it's price goes down, not up (demand being held constant).

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currency • exchange rate • currency exchange • euro • US dollar • weak dollar

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