US dollar is about to 'stare into the abyss'?

https://www.yahoo.com/finance/news/us-dollar-stare-abyss-likely-152550871.html

Reuters

• 
  The US Dollar Index has declined 2.57% in March, notching four losing weeks out of the last five.
  
  
• A senior market analyst from FxPro said the dollar is preparing to "stare into the abyss."
  
  
• "In the last six months, we have seen the quite typical and understandable reversal of the dollar."
  

 

Pundits here in the Great White North are saying the Canadian dollar may "strengthen" to 77 cents US from 75 during 2023. Does this mean our dollar could "climb" to 77 per cent of..... um, not very much at all?

Meanwhile. Bitcoin is back up to $28,000. Wha???

 

I remember when the US Dollar was 2:1 vs the Canadian dollar. And I recall when it was 1:1.

When my wife lived in the UK, the pound sterling was almost 2:1. It made living in that economy difficult for Americans being paid in dollars.

On the larger scale, strong or weak dollars impact the cost of importing goods, but not much else. It goes up. It goes down. It goes up again. Lah-de-dah.

 

Look at it this way, Lerner. If anyone really felt as confident as that analyst wants to sound he wouldn't broadcast his predictions. Instead he would borrow all the dollars he could to buy gold or euros or yuan or whatever. Then when the dollar fell into the abyss he could repay those borrowed dollars for much less. He surely wouldn't tell anyone what he was doing, either.

No, the author is just trying to churn up some interest in buying foreign currencies so as to earn his commissions.

 

One more thing...I never give investment advice and I urge my friends never to listen to investment advice from any "professional", paid or unpaid. A dart board frequently outpicks the investment professionals and an index fund will usually over time outperform any managed fund in total returns.

Now this advice may not seem helpful but the fact is, no one can see the future.

 

Never happened. At least not quite - and not yet. 61.7 cents was lowest on record. 50 cents would be 2:1.

11 July 1864: All-time Canadian-dollar high US$2.78
21 January 2002: All-time Canadian-dollar low US$0.6179 (Google)

 

No. Not quite. But a lot of times nearly. And that's really the point.

 

Is the Canadian dollar what we mean by "cold cash"?

 

Yes. But it's outclassed for cold (and nothing else) by a Tsar-era silver rouble in Verkhoyansk, Sakha Republic. (Sakha people used to be called Yakut - and their region Yakutia. They are still referred to as Yakuts by Russian speakers.) Diamonds are mined there, these days. The Ebelyakh mine is one of the largest diamond mines in the world.

https://en.wikipedia.org/wiki/Verkhoyansk

 

I understated the "dart board". Apparently the dartboard outperformed professional investors even when a chimpanzee threw the darts.

"Round and round and round she goes! Where she stops, nobody knows!" Except the house, Major Bowes. Except the house.

 

The anti-dollar drive spearheaded by Asia

https://www.yahoo.com/finance/news/russia-iran-plan-gold-backed-100000752.html

• 
  
  
  • The dollar's supremacy in global trade faces fresh challenges as several countries float plans to use local currencies in commerce.
  
  
  • Russia and Iran are working to create a gold-backed stablecoin, while France has pursued a trade deal with China in yuan.
  
  
  • Here are 6 rising challenges to the greenback's dominance of international trade and investment flows.

 

Yeah? I wonder what'll happen if the all the "stablecoin" quietly leaves the stable and neither side will admit to anything? Out come the nukes? Neither party is what I'd call a "stable" trading partner.

I don't think it should affect the dollar much - or possibly at all. How much do we really want to buy from these two countries? I like pretty well all of the people I've met who come here from Iran. They're a good bunch - many are highly educated - e.g. my local pharmacist and most of the staff. And there are LOTS of ex-Iranians here - thanks to wave after wave of oppression and repression by horrible, backward governments. Perfect place for China to sell stuff to. They're familiar with that type of setup.
..

 

Precisely. A global currency, backed by full faith and credit of two of the top-five nastiest regimes on the globe (may be literally #1 and #2 most dangerous, if we keep pretending that Communist China is any better)? What can go wrong?

I don't think USD supremacy in global trade is going anywhere anytime soon. Backed by 2 things: US Navy, and the fact that there is no real decent alternative. The Euro comes closest, but these guys are allies in this new Cold War.

 

I admit that I don't understand why USD is the currency of trade. If China buys copper from Burundi (or whatever) Burundi wants dollars and won't take renminbi. Burundi then buys oil from the Saudis.

The Saudis want USD. Global trade is enormous and almost entirely conducted in electronic dollar accounting that might never touch the United States at all. It's almost as weird as bitcoin, come to think of it.

I do think another currency could replace the dollar whether for convenience or political reasons but I also agree that there's no clear replacement outside the euro.

Pounds sterling used to be a big global trade currency but no longer. I don't really know why that happened either. (I'd love to blame decimalization but the dollar is decimal.)

Now it's true that the US economy is vastly bigger than almost any other country's but China is also huge.

Maybe trading in USD is just a habit?

 

Simple. Because, to borrow a phrase from the late (and great) singer, Jim Croce, the pound has consistently, for 200 years at least, been a "low-down mind-messin' steadily depressin' " depreciating currency. It's a big reason why so many Brits, my parents among them, emigrated to North America. It's depreciated badly and consistently, though not quite like the South African Rand. 200 years ago, the pound was worth $5 US. (It reached $10 during the Civil War, and later declined rapidly to $5 again.)

In my youth, (1950s) it was $3 for a long time, before it was devalued by 14% in 1967 and made free-floating in 1971. Between 1967 and 2017 the value of the pound halved. Nowadays, it's worth a fraction of what it was in 1967. Recent prices are around $1.24 US and have been as low as $1.10. I don't think Brexit has helped matters.

Even the Indian rupee is doing better. Since 2022 the pound has declined 13% in terms of rupees. I think it's time to call a "code blue."

 

When I was traveling back-and-forth from DC to the UK, the exchange rate was around 1.7:1.

It's not just that countries and companies transact in US dollars. The dollar is also where they park their money, either in cash or in government securities. This is because the US dollar is very safe and very stable. I would prefer it stayed that way.

 

Is it though?