Sunday, January 06, 2008
Has the dollar bottomed?
There was so much trash-talking the U.S. dollar a couple of months ago that I wondered whether it had hit bottom, at least against the Euro. It continued to decline for a week or two after that post, but despite some bobbing and weaving it has not returned to its low of late November.
Now, I repeat my general disclaimer that I am no more able to predict the direction of a currency's value than a well-tossed coin, but my guess continues to be that the dollar will get significantly stronger against the Euro in 2008. Imagine my delight to read that a New York Times business columnist and a famous portfolio manager have much the same opinion:
THE dollar’s sharp drop over the last two years has been a huge boon for Americans who bought foreign stocks.
But now many market strategists are cautioning investors that the principle would hold true in reverse if the dollar switched course for an extended stretch: a sharp rise in the dollar would cut into foreign stock returns. While these strategists are not saying the dollar will erase all its losses anytime soon, they say it has probably hit bottom and may even be on the rebound.
“Those people who are waiting for the dollar to crash should wake up and smell the coffee, because it has already happened,” said Ed Yardeni, president of Yardeni Research in Great Neck, N.Y.
He predicted that the dollar would strengthen in 2008 — especially when compared with currencies against which it has lost the most ground. Those include the euro, the British pound and the Canadian dollar.
It is not quite time to plan your dream vacation to France, but in the next couple of years it may yet become affordable. In the meantime, enjoy the boom in American exports, which have become one of the real bright spots in the American economy. If you do not work for or own an exporter, you should.
1 Comments:
By 
, at
Mon Jan 07, 02:31:00 PM:
TH, given the Grey Lady's record in such matters, I suggest that your post will make more sense if you change the word "delight" to "chagrin."
