5 ms·

> The value of the dollar has already plummeted, 10% or so this year. Compared to what? From Nov 3, 2024: the USD against: GBP (3)% JPY (1.7)% EUR (6.7)% I

by mgh95 1y ago

> The value of the dollar has already plummeted, 10% or so this year. Compared to what? From Nov 3, 2024: the USD against: GBP (3)% JPY (1.7)% EUR (6.7)% INR 4.6% AUD 1.3% CAD .74% RMB .4% The EUR (if that is what you are going by) is unusually strong, and that's actually starting to cause issues. But the dollar isn't "collapsing".

epistasis 1y ago
https://www.morganstanley.com/insights/articles/us-dollar-declines https://www.morganstanley.com/insights/articles/us-dollar-de...
- mgh95 1y ago
  That operates on calendar year. That is primarily due to the rapid appreciation of the USD vs global based after Trumps election on the perception that tariffs would be far higher and more continuous than they actually were. The truth is, the currency markets are roughly where they were about a year ago, with the exception of EUR, but thats a special case which I think is a symbol if a misstep by the ECB.
  - epistasis 1y ago
    Yes, the calendar year matches what I was talking about, and more closely matches the current economic policy of the US. It wasn't until February that the real economic and foreign policy of the US became clear, and the full insanity of it all is still sinking in. I'm not sure why your hand-picked list of currencies is revelant, or why your particular dates are relevant. The course for the future looks to be a greater devaluation of the US currency. This is the goal of the Trump administration and what is apparent to analysts.
    - mgh95 1y ago
      > I'm not sure why your hand-picked list of currencies is revelant, or why your particular dates are relevant. The course for the future looks to be a greater devaluation of the US currency. What other currencies do you believe are important? We pulled 2-5 of the most commonly used reserve currencies and some other ones as well.
_heimdall 1y ago
Comparing against other currencies are tricky, they often move in a similar direction at different rates.
- mgh95 1y ago
  Exactly what people are saying here (the USD is weakening at an alarming pace! Americans are going Weimar Republic!) isn't borne out in the data. We aren't seeing the USD weaken against other countries in an independent manner. That's the point; not to prove that we are seeing a stalwart dollar, but that we are seeing roughly "business as usual".
  - _heimdall 1y ago
    There are concerning scenarios when all currencies lose, or gain, spending power at a similar rate.
    - mgh95 1y ago
      Sure, but I think we are seeing the US's future more in France at the moment than a secular decline against all other developed nations. There are very real questions about how society is structured that need to be resolved, but the US is far from alone or the worst in that regard.
jltsiren 1y ago
EUR was unusually strong from 2004 to 2015. Since then, it has almost always been between $1.07 and $1.20, which I would consider the normal range.
- mgh95 1y ago
  The EUR is unusually strong, in part due to fiscal tightness by ECB (see their balance sheet L2 Liabilities here https://www.ecb.europa.eu/press/annual-reports-financial-statements/annual/balance/html/index.en.html https://www.ecb.europa.eu/press/annual-reports-financial-sta...) compared to the US. This is having a knock-on effect that the EUR strengthens against the dollar, which actually causes a whole host of problems for an export economy. It's why you see Lagarde calling for a reserve EUR; it's the only way to export EUR at this point. But that's a topic for another time.
  - jltsiren 1y ago
    I don't see any evidence that EUR is particularly strong against USD. Except maybe if you take a very short-term perspective. There is always some volatility in exchange rates, and export businesses that cannot tolerate 10% swings in either direction are not viable in the first place.
    - mgh95 1y ago
      > I don't see any evidence that EUR is particularly strong against USD. Except maybe if you take a very short-term perspective. Yes; this is a short term perspective. Europe is functionally an export market and these currency fluctuations hurt badly. For example, Mercedes-Benz had a consolidated profit margin in '22 of around 9%. These swings do either force loss of jobs (bad) or require a devaluation of the currency.4
      - jltsiren 1y ago
        Europe was also an export market in the past. Back in early 2002, 1 EUR was worth less than 0.9 USD. Then it started climbing rapidly and reached a peak of 1.6 USD in mid-2008. The value of money is inherently unpredictable. The exchange rate between EUR and USD has never been stable longer than about 1.5 years. Something unexpected always happens, and then the rate goes up or down by 10% or even more. You either tolerate that or try protecting yourself with various financial instruments.
cogman10 1y ago
The BRL or CNY is probably one of the most apt comparison given the BRICKS alliance. That's where you are seeing the roughly 10% swing since Jan. (if you go back to last Oct the swing is less pronounced. IDK exactly what was happening last Oct, but there appears to have been an upswing in dollar value from Oct to Jan and a steady decrease of the dollar value since.)
- mgh95 1y ago
  In October of last year, people were betting on Trumps election leading to tariffs leading to a stronger dollar. This trend continued post-election pre-inaguration. Since the tariffs did not materialize to the level expected, the dollar weakened to its levels prior to his election.
  - epistasis 1y ago
    Your explanation makes no sense. First, nobody thought that Trump would actually go through with the tariffs because it's an insane plan and that wiser people in the administration would restrain Trump. So the dollar started to devalue when people realized that "holy shit these tariffs might actually happen." The tariffs are way way bigger than anybody expected. The entire goal of the tariffs were to weaken the dollar: > The Mar-a-Lago Accord is a proposed economic and trade initiative of the Donald Trump administration during his second term. Named after Trump's Mar-a-Lago estate in Florida, the Accord is a blueprint for restructuring global trade and monetary relations. Its core goal is to devalue the dollar while preserving its role as the world reserve currency, a careful balancing act intended to avoid the contradictions described in the Triffin paradox. https://en.wikipedia.org/wiki/Mar-a-Lago_Accord https://en.wikipedia.org/wiki/Mar-a-Lago_Accord
    - mgh95 1y ago
      No, ordinarily tariffs result in currency appreciation (see https://www.wto.org/english/blogs_e/ce_ralph_ossa_e/blog_ro_11apr25_e.htm https://www.wto.org/english/blogs_e/ce_ralph_ossa_e/blog_ro_... for an accessible discussion). But yes: weaking the dollar was the goal, but the US did not achieve that to the degree of something like the Plaza accords.
wqaatwt 1y ago
> The EUR (if that is what you are going by) is unusually strong By what standards? It’s slightly above the trend (i.e. continuous decline since 2008 with an occasional up and down here and the) but not that substantially
- mgh95 1y ago
  It's substantial for the eurozone economy, namely their exporters. The machinery sector in particular is under major pressure as a result of the stronger euro.
jjav 1y ago
> > The value of the dollar has already plummeted, 10% or so this year. > Compared to what? In terms of the DXY "US Dollar Index" https://finance.yahoo.com/quote/DX-Y.NYB/ https://finance.yahoo.com/quote/DX-Y.NYB/
- mgh95 1y ago
  The dixie is weighted heavily towards the Euro (~58% weight). The euro is enough to move the index independently of other movers.
  - Sammi 1y ago
    Is the euro weighted at 58% for a reason?
    - mgh95 1y ago
      Its fixed at that proportion by the index cboe. The dixie weakening is indistinguishable from the euro strengthening
mgh95 1y ago
Reply, since I cant edit: even the commentators agrees it's looking increasingly necessary to weaken the euro: https://archive.is/biCxs https://archive.is/biCxs

by mgh95 1y ago

epistasis 1y ago

https://www.morganstanley.com/insights/articles/us-dollar-declines https://www.morganstanley.com/insights/articles/us-dollar-de...

mgh95 1y ago
That operates on calendar year. That is primarily due to the rapid appreciation of the USD vs global based after Trumps election on the perception that tariffs would be far higher and more continuous than they actually were. The truth is, the currency markets are roughly where they were about a year ago, with the exception of EUR, but thats a special case which I think is a symbol if a misstep by the ECB.
- epistasis 1y ago
  Yes, the calendar year matches what I was talking about, and more closely matches the current economic policy of the US. It wasn't until February that the real economic and foreign policy of the US became clear, and the full insanity of it all is still sinking in. I'm not sure why your hand-picked list of currencies is revelant, or why your particular dates are relevant. The course for the future looks to be a greater devaluation of the US currency. This is the goal of the Trump administration and what is apparent to analysts.
  - mgh95 1y ago
    > I'm not sure why your hand-picked list of currencies is revelant, or why your particular dates are relevant. The course for the future looks to be a greater devaluation of the US currency. What other currencies do you believe are important? We pulled 2-5 of the most commonly used reserve currencies and some other ones as well.

_heimdall 1y ago

Comparing against other currencies are tricky, they often move in a similar direction at different rates.

mgh95 1y ago
Exactly what people are saying here (the USD is weakening at an alarming pace! Americans are going Weimar Republic!) isn't borne out in the data. We aren't seeing the USD weaken against other countries in an independent manner. That's the point; not to prove that we are seeing a stalwart dollar, but that we are seeing roughly "business as usual".
- _heimdall 1y ago
  There are concerning scenarios when all currencies lose, or gain, spending power at a similar rate.
  - mgh95 1y ago
    Sure, but I think we are seeing the US's future more in France at the moment than a secular decline against all other developed nations. There are very real questions about how society is structured that need to be resolved, but the US is far from alone or the worst in that regard.

jltsiren 1y ago

EUR was unusually strong from 2004 to 2015. Since then, it has almost always been between $1.07 and $1.20, which I would consider the normal range.

mgh95 1y ago
The EUR is unusually strong, in part due to fiscal tightness by ECB (see their balance sheet L2 Liabilities here https://www.ecb.europa.eu/press/annual-reports-financial-statements/annual/balance/html/index.en.html https://www.ecb.europa.eu/press/annual-reports-financial-sta...) compared to the US. This is having a knock-on effect that the EUR strengthens against the dollar, which actually causes a whole host of problems for an export economy. It's why you see Lagarde calling for a reserve EUR; it's the only way to export EUR at this point. But that's a topic for another time.
- jltsiren 1y ago
  I don't see any evidence that EUR is particularly strong against USD. Except maybe if you take a very short-term perspective. There is always some volatility in exchange rates, and export businesses that cannot tolerate 10% swings in either direction are not viable in the first place.
  - mgh95 1y ago
    > I don't see any evidence that EUR is particularly strong against USD. Except maybe if you take a very short-term perspective. Yes; this is a short term perspective. Europe is functionally an export market and these currency fluctuations hurt badly. For example, Mercedes-Benz had a consolidated profit margin in '22 of around 9%. These swings do either force loss of jobs (bad) or require a devaluation of the currency.4
    - jltsiren 1y ago
      Europe was also an export market in the past. Back in early 2002, 1 EUR was worth less than 0.9 USD. Then it started climbing rapidly and reached a peak of 1.6 USD in mid-2008. The value of money is inherently unpredictable. The exchange rate between EUR and USD has never been stable longer than about 1.5 years. Something unexpected always happens, and then the rate goes up or down by 10% or even more. You either tolerate that or try protecting yourself with various financial instruments.

cogman10 1y ago

The BRL or CNY is probably one of the most apt comparison given the BRICKS alliance. That's where you are seeing the roughly 10% swing since Jan. (if you go back to last Oct the swing is less pronounced. IDK exactly what was happening last Oct, but there appears to have been an upswing in dollar value from Oct to Jan and a steady decrease of the dollar value since.)

mgh95 1y ago
In October of last year, people were betting on Trumps election leading to tariffs leading to a stronger dollar. This trend continued post-election pre-inaguration. Since the tariffs did not materialize to the level expected, the dollar weakened to its levels prior to his election.
- epistasis 1y ago
  Your explanation makes no sense. First, nobody thought that Trump would actually go through with the tariffs because it's an insane plan and that wiser people in the administration would restrain Trump. So the dollar started to devalue when people realized that "holy shit these tariffs might actually happen." The tariffs are way way bigger than anybody expected. The entire goal of the tariffs were to weaken the dollar: > The Mar-a-Lago Accord is a proposed economic and trade initiative of the Donald Trump administration during his second term. Named after Trump's Mar-a-Lago estate in Florida, the Accord is a blueprint for restructuring global trade and monetary relations. Its core goal is to devalue the dollar while preserving its role as the world reserve currency, a careful balancing act intended to avoid the contradictions described in the Triffin paradox. https://en.wikipedia.org/wiki/Mar-a-Lago_Accord https://en.wikipedia.org/wiki/Mar-a-Lago_Accord
  - mgh95 1y ago
    No, ordinarily tariffs result in currency appreciation (see https://www.wto.org/english/blogs_e/ce_ralph_ossa_e/blog_ro_11apr25_e.htm https://www.wto.org/english/blogs_e/ce_ralph_ossa_e/blog_ro_... for an accessible discussion). But yes: weaking the dollar was the goal, but the US did not achieve that to the degree of something like the Plaza accords.

wqaatwt 1y ago

> The EUR (if that is what you are going by) is unusually strong By what standards? It’s slightly above the trend (i.e. continuous decline since 2008 with an occasional up and down here and the) but not that substantially

mgh95 1y ago
It's substantial for the eurozone economy, namely their exporters. The machinery sector in particular is under major pressure as a result of the stronger euro.

jjav 1y ago

> > The value of the dollar has already plummeted, 10% or so this year. > Compared to what? In terms of the DXY "US Dollar Index" https://finance.yahoo.com/quote/DX-Y.NYB/ https://finance.yahoo.com/quote/DX-Y.NYB/

mgh95 1y ago
The dixie is weighted heavily towards the Euro (~58% weight). The euro is enough to move the index independently of other movers.
- Sammi 1y ago
  Is the euro weighted at 58% for a reason?
  - mgh95 1y ago
    Its fixed at that proportion by the index cboe. The dixie weakening is indistinguishable from the euro strengthening

mgh95 1y ago

Reply, since I cant edit: even the commentators agrees it's looking increasingly necessary to weaken the euro: https://archive.is/biCxs https://archive.is/biCxs