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Weak economies often have some inflation and thus high interest rates. During the time of almost zero interest rates in the US, people borrowed Dollars and not
by southerndrift 8y ago
Weak economies often have some inflation and thus high interest rates. During the time of almost zero interest rates in the US, people borrowed Dollars and not their local currency to get money cheaper.
The problem arises now that the value of the Dollar is rising. People have to exchange their local currency back into Dollars to pay back their credit loans. They have to pay more than they expected which can be a problem.
- skookumchuck 8y agoIs the value of the Dollar rising, or the value of the local currency falling? I'd say the latter.
- potatoyogurt 8y agoYeah, inflation is not negative, so it doesn't seem reasonable to say that the value of a dollar is rising.
- PacifyFish 8y agoTo out-pedanticize (?) your pedantry, by convention currencies are valued against other currencies - this is why the tickers at the bottom of Bloomberg show USD-EUR, USD-CNY, et cetera. In the context of this thread, you're expected to interpret "the value of the Dollar is rising" as "it costs more Turkish Liras to buy a dollar today than it did yesterday."
- tuesdayrain 8y agoI feel like this is missing his point, and he was actually asking if the change in currency value was mainly due to America getting stronger, or due to the other countries getting weaker. So far this comment thread has been fairly US-centric, and I believe he was suggesting it's more that these other countries are just failing, rather than the US doing particularly well.
- nradov 8y agoCurrency values don't necessarily correspond to the strength or weakness of a country. Sometimes countries that are strong in terms of GDP, military power, or other metrics intentionally drive down their currency value in order to improve their balance of trade.