Dollar Continues Drop Against Euro

FRANKFURT, Germany - The dollar continued its descent into record low territory against the euro Wednesday amid fears about the health of the U.S. economy.
The 13-nation currency traded as high as $1.3784 overnight before settling back to $1.3767 by afternoon in Europe. That compared with the $1.3729 it bought in New York late Tuesday.
The British pound hit a new 26-year high against the dollar, rising to $2.0322 , its highest level since June 1981 , from the $2.0267 it bought late Tuesday.
"Currency markets have arguably been left focusing on just one point at the moment and that's concern over the possible collapse of the U.S. subprime lending market," said David Jones, chief market analyst at CMC Markets in London.
"The result has been to put the dollar under some sustained pressure through the overnight session."
The subprime market refers to loans, such as mortgages, given to borrowers with spotty credit histories that tend to have higher interest rates. Subprime borrowers have missed a lot more payments on loans amid higher interest rates and a slowdown in the U.S. economy.
A higher euro makes goods from the 13-nation currency zone more expensive for customers abroad and cuts into manufacturers' profits if they try to keep the U.S. dollar price of products constant.
However, European Central Bank executive board member Juergen Stark downplayed those concerns earlier this week. He said more than 50 percent of euro-zone countries' exports go to other euro-zone members, which makes them less vulnerable to currency fluctuations.
On Tuesday night, he noted that "the improvements in economic fundamentals are being reflected in exchange rates."
Along with the rise in the pound, the stronger euro also makes visits to much of Europe more expensive for travelers from elsewhere and makes shopping trips to the U.S. more appealing to Europeans.
"I said to my friend 'Thank goodness we bought all our gifts before we got to Brussels last week,'" Susan Chorney, a middle school teacher from Greenwich, Connecticut, said in Berlin.
"I know we'll slow down on buying things to take home. We're more thoughtful about spending small dollars right now."
The euro started surging against the dollar on Tuesday, breaking through the $1.37 mark for the first time since it started trading in 1999, as concerns about the U.S. economy were fueled by discouraging growth forecasts from key retailers and homebuilders.
The dollar got no boost from a speech by U.S. Federal Reserve Chairman Ben Bernanke that offered little insight into the central bank's next move and focused instead on how the bank makes its inflation-fighting decisions.
The Fed has left its benchmark rate unchanged at 5.25 percent for a year following two years of steady increases.
That contrasts with the ECB, which has raised rates steadily and is expected to do so again to 4.25 percent in September; and the Bank of England, which last week increased its benchmark rate to 5.75 percent, a six-year high.
Higher interest rates, a weapon against inflation, can bolster a currency by giving better returns on fixed-income investments.
The dollar fell to 121.48 yen from 122.03 yen after the Japanese government said the country's current account surplus expanded for the fifth straight month in May, auguring well for economic growth in the second quarter.

MATT MOORE
The Associated Press

Losing Currency

Today's young could be the last generation that deals in cash, or writes cheques. With the growth of electronic money, a revolution is underway. Plastic cards and electronic money transfers are about to supplant the paper tokens that we are used to as instruments of trade, whether in the form of currency notes or cheques. The US, for example, is a $13 trillion economy, but only $400 billion circulates within it in the form of currency. Americans hold an average of seven credit or debit cards for everybody over the age of 15. No more counting out the change; no more rushing to the nearest bank or ATM. Its sheer convenience is making electronic money burgeon across the world, crowding out cash transactions. Although we are accustomed to dealing in paper money, let's not forget it has a short history. The 20th century was the only period to be dominated by it. It was invented by the Chinese around 650 CE, but came to Europe as late as the 17th century with the Swedes being the first Europeans to adopt it. Muhammad bin Tughlaq, in a typical fit of visionary insanity, tried to introduce paper money to India but failed. India's revolution in paper money had to await another revolution: the decline of the Mughal empire and the advent of the British. For those disconcerted by the shift to electronic money, a paper currency note worth Rs 500 too is an abstraction. It is actually a promissory note. Pink Floyd sang “Money, it's a gas” — long before credit cards or electronic transfers came into vogue. Many countries have introduced plastic in place of paper bills, in order to reduce replacement costs. Why not go the whole hog then and have a piece of plastic represent a variable rather than a fixed amount of money? Credit, of course, is the lubricant of modern economies, just as paper money lubricates trade. While convenient, the introduction of paper money had political implications. It could be printed without limit, which could induce hyper inflation. But it could be printed freely by governments in times of need for better management of monetary policy. Switching to electronic money, too, is going to shake up politics, since electronic transfers are instantaneous and global. New thinking will be required to understand and manage money supply before cash transforms totally into credit and electronic transfers. Perhaps one's neighbourhood hawala consultant will suggest innovative options.

http://timesofindia.indiatimes.com/Opinion/Editorial/Losing_Currency/articleshow/2159081.cms

Which Are The Top Forex Currencies?

The Forex (Foreign Exchange Market) exists because multi-national corporations and nations need to buy and sell goods/services from outside sources. To do that, they need to exchange their home currency with that of other nations. As you know, not all currencies have the same buying power so nations, banks, and corporations exchange their money with one another just as tourists do when traveling abroad-same concept, just a LOT bigger scale!In fact, the Forex is the single largest financial market in the world and upwards of 1.8 trillion dollars are traded every day-between the hours of 5 p.m. EST Sunday thru 4 p.m. EST Friday. Between those hours, the Forex market is open and there are always brokers out there willing to buy and sell positions. However, unlike the NYSE, there is no centralized exchange but rather an informal network of computers supplied by investment houses, centreal banks, and other large players which help facilitate the trades.The forex market actually trades dozens of different currency pairs. The base currency is the first in the pair and was used to set up the trading account. The counter currency is the second in the pair and is sometimes referred to as the "terms" currency. A typical lot is $100,000 and an investor might be interested in the currency pair USD/CAN for instance. That means that the investor would buy $100,000 worth of Canadian dollars with the base currency (USD) at the current exchange rate in order to open a position.

BY Kent Douglas

The New World Currency

Do you ever consider the possibility that the money you work so hard for could be gone from your pocketbook in the next few years? Quicker then you might think, currency as we know it, is changing. Necessity for efficiency is transforming the flow of cash into a digital form. The use of e-currency is quickly spreading throughout the world. Everyday, more and more people are making purchases online. These purchases are being facilitated by companies like Paypal, E-Bullion, E-Gold and Net Pay. The digital age is definitely upon us, and with the new forms of commerce, comes new forms of opportunity. With the advent of these E-currency companies, trade between different countries is suddenly becoming easier and more profitable. New products and services are quickly filling the need for the flow of money. The one constant still remaining is the ever present, currency exchange rates. To avoid these fluctuations and exchange fees, companies have facilitated their transactions with the global currency of gold. Some online e-currency companies now tout that their holdings are 100% backed by gold. This no longer is true for any of the national currencies now in existence. The United States for example, has not had 100% of their currency backed by gold, since the end of the gold standard in 1914. The value of the U.S dollar continues to decline, as the value of gold rises steadily. Due to national inflation, the cash you hold in your hand will continue to lose value. Unfortunately, there is not nearly enough gold to cover all of the paper money holdings. That money you hold in your hand is basically a loan from the government. The tenet of many governments, when they fall on hard times, is to print more money. This fact has led to the desire for more worldwide corporations to embrace the idea of a worldwide currency.

By Matthew Sherborne

CurrencyExchange Basics

Currency Exchange Basics:-If you are planning to travel abroad in the near future, you will probably need some local currency. That is where a currency exchange service comes in. Currency exchange is when you trade currency from one country to the equivalent monetary value in the currency of another country.
A currency exchange service will take your dollars and give you the equivalent value in Euros for example. The value of each currency is governed by what is refered to as the currency exchange rate (or simply the exchange rate). The currency exchange service will take a small fee for making the transaction and this is normally a percentage of the amount you are exchanging.
Finding a Currency ExchangeMost banks and even hotels will provide a currency exchange service for you. Sometimes this is a convenient way to obtain the local currency. Recently, it has become possible to exchange currency online using a number of different currency exchange service websites. Normally, the online rates are more up to date and they tend to change a lower overall fee for the transaction.
If you know how much currency you will need for your trip, making the trade online might be the right approach for you. If you do decide to exchange your currency beforehand, make certain you understand the risks associated with changes in the exchange rate. If the currency you are trading is volatile relative to your local currency, it is possible to lose money in the transaction and the values of the currencies fluctuate.
Typically, experts do recommend that you avoid exchanging currencies at airports or near popular tourist destinations. Compared to banks or hotels, currency exchange are these services main and only business, and as a result they typically will charge a higher fee to exchange currencies. If you need some quick cash, this might not be a big problem, but for anything over a few hundred dollars you will be much better of using a bank or an online currency exchange service to make sure you receive a fair and reasonable exchange rate.