Economics Exchange Rates Commentary Essay Example for Free

Economics Exchange Rates Commentary Essay NEW YORK (Dow Jones)The dollar continued its slide Wednesday, touching its lowest level in 12 months against the euro and flagging against the yen as rising equities battered the greenback yet again. The dollar has lost key legs of support over the past two weeks as encouraging global economic data has led investors to assume more risk and buy higher-yielding assets. With the recession receding and financial markets in recovery, investors have become more confident theres no longer a need to hold their money in a safe-harbor currency like the dollar. Because of the Federal Reserves need to stimulate the economy, the dollars ultra-low interest rates have made it the lowest-yielding major currency. The cost of borrowing U.S. dollars in the London interbank market continued its slide Wednesday. The key three-month London interbank offered rate marked its lowest level since the British Bankers Association first introduced its Libor fixings in 1986. The dollar hit its lowest level against the common currency since September 2008 in New York afternoon trading, with the euro touching a 12-month high at $1.4738. If the euro is able to sustain levels above $1.4720, a key technical level, it could be on a march to $1.50, said Carl Forcheski, vice president for foreign exchange at Societe Generale in New York. The dollars losses were broad, sinking to new 13-month lows against the Australian and New Zealand dollars as well as lows for 2009 versus other widely traded counterparts. The U.K. pound also piggy-backed off the euros gains to advance on the dollar. The yen had been the so-called carry trade currency of choice, but with U.S. interest rates expected to remain feeble until 2010, analysts anticipate the dollar to continue funding riskier bets. A carry trade involves buying a lower-yielding currency to fund purchases of higher-yielding assets. The dollar was also burdened Wednesday by comments from Japans incoming finance minister, Hirohisa Fujii, who said he saw no need to intervene in currency markets to weaken the yen. In the past, the dollar had received support from the belief that Japan would intervene to prevent unwanted appreciation of its currency. Theres no change in my thinking that its not the time to consider foreign-exchange intervention, Fujii said at a news conference. Though he wouldnt rule out intervention in what he termed really abnormal situations, Fujii said the idea that the yen should be cheaper for the sake of [Japans] exporters is wrong. Wednesday afternoon in New York, the euro was at $1.4729 from $1.4667 late Tuesday, according to EBS via CQG. The dollar was at Y90.78 from Y91.06. The euro was at Y133.72 from Y133.60. The U.K. pound was at $1.6506 from $1.6495, while the dollar was at CHF1.0306 from CHF1.0340. U.S. economic data released Wednesday, including as-expected August consumer price index and better-than-expected industrial production numbers, pointed to a continuing recovery, leading stocks to rally. The Dow Jones Industrial Average rose 108 points, lending support to the euro and other high-yielders. The dollar looks likely to continue its broad-based slide through the rest of the year, analysts said. As long as the buck doesnt fall too far too fast, dollar weakness is expected in a time of loose monetary policy, said Adnan Akant, a currency specialist at money manager Fischer Francis Trees Watts, a New York unit of BNP Paribas. Right now, the euro and other higher-yielding currencies are reaping the benefits of a global economic turnaround and stock market rallies, but within the next 12 months, the dollar should start benefitting from a recovering U.S. economy, said Wells Fargo analysts. The Canadian dollar ended higher near its strongest levels of the day Wednesday, reflecting another sustained flight into riskier assets like stocks and commodities at the expense of the slumping U.S. dollar. The U.S. dollar was trading at C$1.0666 late afternoon, from C$1.0721 late Tuesday. Strong gains for oil, gold and other commodities as well as rising North American equity markets underpinned the Canadian dollars gains, although the currency again failed to mount a serious challenge of its year-to-date high at C$1.0639, achieved in early August. Commentary The article refers to a depreciation of the dollar against major currencies due to â€Å"ultra-low interest rates† and increased risk by investors. The Federal Reserve has been cutting interest rates in an attempt to boost aggregate demand and stimulate the economy. High interest rates in an economy generally encourage investment in that currency as the value of the investment will increase over time. Currently US interest rates set by the Federal Reserve are around 0.25% compared to the European Central Bank’s 1%. Because of this, investors have switched to higher yielding currencies, such as the Euro, and to a lesser extent the Pound, causing a fall in the Dollar’s exchange rate. This is shown in Diagram 1. As the diagram shows, a right shift in the supply of the Dollar leads to a fall in its price relative to the Euro. In addition, the aforementioned cutting of interest rates is an expansionary monetary policy used to manipulate aggregate demand. The trade off of this policy is increased inflation. A high rate of inflation might further decrease investment in Dollar assets as the real value of the investment would decrease over time. During times of economic crisis, investors tend to invest in low risk assets such as generally strong currencies like the dollar. However with signs that the global economy is exiting the recession and in recovery, not only does the demand for safe-harbor currencies like the dollar decrease, but there is an increased demand for high risk investment due to bullish speculation. In addition, some consumers, firms, or foreign central banks might believe that despite the improving economic situation, the Dollar will continue to fall as the article mentions and sell dollar assets. This bearish speculation would further increase the supply of the dollar and perhaps lead to self-fulfilling prophecy. As shown above, the combination of the three factors leads to a sharp fall in the exchange rate. As previously mentioned, this depreciation could cause a self-fulfilling prophecy in which the initial bearish speculation leads to depreciation, which in turn causes more bearish speculation causing the exchange rate to enter a downward spiral. Initially, the Federal Reserve might not intervene but if the depreciation continued, it would be forced to buy back Dollars to counteract the increases in supply. This would slow the depreciation, discouraging people from selling dollars. It might even create bearish speculation as some might assume the dollar market will bottom out and start to appreciate. The depreciation of the Dollar should benefit the US economy by means of an improved current account deficit. Initially, the deficit will worsen as the demand for imports and exports is inelastic in the short run, but eventually the current account balance will improve as US exports become more competitive. US export revenue will increase while expenditure will fall. This improved current account situation will boost AD leading to economic growth. This is shown below in Diagram 3. Diagram 3 However, as the diagram shows, in the long run, there will be the trade off of inflation as AD rises. This might encourage Federal Reserve to strengthen the Dollar to reduce imported cost-push inflation. In addition, the increased demand for US exports will increase the demand for the Dollar causing appreciation. Foreign nations might eventually implement import controls such as tariffs on US goods in order to preserve their own current account balances. Eventually, the Dollar should regain its status as a high-yielding currency [ 1 ]. The value of one currency expressed in term of another [ 2 ]. A period in a business cycle following a recession, during which the GDP rises. [ 3]. Believing that a particular security, a sector, or the overall market is about to rise [ 4 ]. Revenue from the exports of goods and services and income flows is less than the expenditure on the import of goods and services and income flows in a given year

The Diary of an Anne Frank Essay -- Essays Papers

The Diary of an Anne Frank The events recounted in Anne Frank’s Diary took place during World War 11. By 1933, the strongest party in Germany had gained ultimate power with Hitler under their command. Hitler was Germany’s dictator who spread his gospel of racial hatred through politics. While poverty and unemployment were at an all time high he launched a campaign of anti-Semitism. Hitler’s main target was the Jews, claiming that they were â€Å"racially inferior.† He developed an idea of a Master Aryan Race, the need to rid Germany of â€Å"inferior people†, such as Jews and Gypsies, and the need to expand Germany’s borders. In doing this, he caused many Jews to abandoned their homes and go into total isolation. The Frank family was one of many who endured Hitler's wrath. The Diary of Anne Frank is about a little girl who tells her story of struggle and courage through her diary. On Anne’s thirteenth birthday she received various presents, but the present that she cherished the most was her diary that she named â€Å"Kitty†. The Diary of Anne Frank, captures Anne’s feelings, emotions, thoughts, and events that surrounded her. On May 10, 1940 the German Army invaded the Netherlands, where Anne and her family lived. The invasion caused them to go into secret hiding, because of fear of their life. This was the first measure in the campaign of persecution against the Jews of the Netherlands. A short phrase captures Anne’s emotions about this situation; â€Å"Anti-Jewish decrees followed each other in quick succession. Jews must wear yellow star, Jews must hand in their bicycles, Jew are banned from trams and are forbidden to drive. Jews must be indoor by eight o’clock and cannot even sit in their own gardens after hour. Jews may not take part in any public sports. Jews may not visit Christians. Our freedom wa s strictly limited. Yet things were bearable.† Even though things were tough, Anne always tried to look for the good things in situations and make the best of them. After the invasion the Frank family went into hiding in the â€Å"Secret Annexe† with the help of Mr. Franks colleagues. This is where her two-year journey of fear begins for Anne. I am sure that such repression and fear of life would make almost any teenager completely depressed and miserable. However, Anne managed to keep her hope for a better tomorrow and man... ...heerfulness attitude. One person recalls, â€Å" She was very pallid at first, but there was something so intensely attractive about her frailty and her expressive face.† Despite what was going on around her, she tried to keep a joyful attitude at Westerbork. Shortly after Anne’s sister died of typhus, Anne sensed something was wrong with herself and passed away peacefully. If she had survived a few more days she would have been there for the liberation of the concentration camp. The Diary of Anne Frank is wonderfully well presented, not losing the interest of the reader. Each part of the diary helps me understand the terrible hardships that she faced and how she overcame her problems. Even though she was young, she still had a very effective style of writing to inform her readers. This book shows us the ignorance of what Hitler caused thinking that one race is â€Å"racially inferior† to another. The Diary of Anne Frank is a superb book to read to find out about the struggle and hardships that that the Jews had to face during World War 11. It showed me that even the Nazis could not diminish the hope and happiness of a fourteen-year-old girl named Anne Frank.

Representations of Men in Advertising

What is a man? This question may be odd to hear, but it's a question that is answered constantly by advertisers in print ads and television commercials, all with different approaches. But he question the advertises are asking is â€Å"What images of men will sell my product? â€Å". There is the image of the rebel, the masculine heroes, the violent or aggressive man, or the classic ‘Gentleman'. In recent years we see advertisers moving closer towards the image of the ‘modern man'. The modern man, also known as the metro-sexual man, can be defined as well groomed, health and body conscious, and well dressed. The deconstruction of the two advertisements, Ralph Lauren and Michelob Ultra, accentuate this image and show its influence on the male audience. The Michelob Ultra advertisement preys on the modern mans body image perceptions, and uses them to create a desire for their product. The ad depicts an athletic swimmer, of whom we are to believe consumes the product, getting out of the pool, a picture of the product, and the heading â€Å"Lose the Carbs. Not the taste†. The caption â€Å"†¦ this is your fountain of youth† insinuates that this product will keep you healthy youthful, while being able to enjoy alcohol. There is a famous quote from Edgar A. Schoaff that reads, â€Å"Advertising is the art of making whole lies, out of half truths†. This ad from Michelob is a perfect example of this. In reality, the beer still contains carbs, almost the same amount as regular beer, but using an almost irrelevant idea of low carbs and transforming it into a, for lack of a better term, ‘healthy' beer. This misleading idea forces easily persuaded body conscious males to believe in their product. Ultimately, this kind of advertising manipulates males thoughts and plants false images of an unattainable body. The ‘modern man' look has grown increasingly more popular due to advertisers push to make men obsessing over their own body image. The advertisement for Ralph Lauren targets these image wise men and positions themselves as the ‘right' image. The ad is almost completely in black and white, with just the brand name, â€Å"Ralph Lauren† standing out in the background. The contrast makes for a striking and eye catching advertisement, with a hint of panache. It depicts three young men hurdling over a tennis net, boasting their clothes and style. Thre three men are racing, playing off men's stereotypical competitiveness and pursuit to be the best. The ad suggests that Ralph Lauren will help you get there. David Foster Wallace sums this up with his quote, â€Å"It did what all ads are supposed to do: create an anxiety relievable by purchase†. The anxiety is the endeavour to be the best and the brand will help you in that objective. Therefore, this ad boasts itself as an image of what the modern man should strive for. As a result of the many advertising archetypes presented and beliefs about normalcy, young men are growing up being bombarded by different representations and images of males and find it impossible to not fall victim of them. Young men are often enticed to emulate what they see on the television, hear on the radio or read on a newspaper ad. The allure of the lifestyle presented in advertising is most often great enough to coax the consumer to buy into it. These facts are supported by the aforementioned advertisements. Both similar in regards to target audiences, and give impressions of the modern man. One of perfect body aspirations, and the other a pursuit for the perfect look. But both simultaneously give people ambitions to be the modern man.

What I Think When I Have A Writing - 849 Words

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