Posts tagged automobile

US dollar falls to 14-year low against the yen

BBC News: Click Here

“The US dollar has hit a 14-year low against the Japanese yen with low interest rates in the US making the greenback less attractive to investors.”

According to BBC News, the US dollar has slipped to 86.5 yen. It seemed to have lost its name as ‘world currency.’ With low interest rates and unstable economy within the US, the investors are ditching the US dollars and finidng an alternative (such as Euro, Yen, or gold). This has significantly affected the US dollar to fall. Investors wanted safe, high-profit currency; not low-profit, unstable US Dollar.

While the US Dollar slipped to 86.5 yen, other currencies such as Euro, Yen, or gold have increased dramatically. The price of gold was especially surprising. The price of gold was steadly rising for last 5 years! This significantly increased especially during the last 2 years when there was a global economic recession. Investors wanted more safe investments. So they chose gold.

Yet, I do not think the fall in US dollar is a bad news for US automobile companies or export companies. As the value of US dollar compared to other major currencies has fallen, the exporting companies have gained price advantage over other companies in the country with high currency. Also this will allow companies in the US to gain more control of the domestic market as other companies based on the country with high currency compared to the US dollar will lose a price advantage.

<A terrified Japanese man reluctantly trading US dollars for Japanese Yen>

Japanese exporting companies would be seriously concerned about this situation. As 40% of its economy is based on exporting, it is a serious matter related to the recovery of economic downfall in Japan.

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