Theories on why Dollar is Strengthing vs Peso

soulskier

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With the Dollar now the strongest against the Peso in 5 years, anyone want to weigh in on why this is happening?
 

bigbadwolf

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Due to the global financial crisis, people have increased their dollar holdings (though it makes no sense). As a consequence, the dollar has been appreciating against most currencies (save the yen). I expect this to be a short-term phenomenon as the fundamentals are all weighing against the dollar.
 

perry

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Fully agree with Big Bad wolf on this one . By the end of November or even sooner the dollar will change course

Actually the Argentine Peso has devaluated against the dollar at most 10 percent since this crisis has started . The real has devalued 40 percent and most currencies like the Euro. Aussie Dollar , English Pound lost around 20 percent of their values against the USA dollar.

Argentina has one of the worlds smallest stock markets meaning that wild fluctuations that you have seen in Brazil with its very speculative stock market are in its favor.

There will be huge upheavals in the world financial markets in the coming weeks causing the most volatile currency market the world has seen . We are living in very interesting times
 

jdgabb6d

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The US dollar is still the primary reserve currency and it's considered (like gold and swiss francs) a stable currency/good place to put your $ in times of crisis. Currencies trade in pairs and the USD is the typical base currency. So when someone talks about selling the euro, that would involve a simultaneous purchase of the USD. That creates a lot of volume (momentum) for the USD. Furthermore, there's a built in expectation that the fed will eventually raise rates. With that, you have a decent, but not complete, picture of why the dollar is rising.

The peso will continue to drop. Look for 3.5 by January
 

soulskier

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Interesting views so far. Our recipe for success thus far in Argentina has been to earn dollars but live on pesos. Based on the responses, it appears this formula should continue to be effective for some time. Thoughts?
 

perry

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This is the last hurrah for the Dollar as it is being artifically priced high by fear . There is no justification whatsoever for its value right now. I do not know what currency to recommend but gold is looking very attractive .
 

Ries

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I am not so sure that even if the US economy goes to hell in a handbasket, it will mean that much for the dollar.
2/3 of the dollars in circulation trade outside of the USA.
The dollar is a primary currency among peoples in Uzbekestan and the Congo and many other places in the world who will never go to the US, couldnt tell you what the current interest rate on a mortgage is, and dont care.
A hundred dollar bill, north of Chang Mai, will still buy you almost anything. Doesnt matter who is president, or whether Lehmann Brothers exist.

So my guess is that the dollar will remain a trading currency for some time, even as US belts tighten and taxes go up.
There is no credible threat of the US government defaulting on treasury bonds, or in other ways affecting the value of the dollar as a trading currency in other countries.
 

sergio

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The peso will continue to decline. I predict 3.5 before the end of the year. It is a mini devaluation to make exports more competitive. It is not short term.
 
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