Grinch steals Christmas; DOLLAR takes a nose DIVE
The U.S. currency had its steepest single-day fall [10 days before Christmas] against the yen since March 2002, after the Federal Reserve on Tuesday dropped the word "accommodation" from its policy statement, interpreted by some as a signal that its 18-month credit-tightening campaign was nearing an end.
[T]he dollar sank 2.7 percent to 116.73 yen , its lowest level in a month.
I'm not sure where the dollar stands today in relation to the yen (if you figure it out, give me a hollar).
But, while NYC commuters were bitching about the shopping time wasted by transit workers who called a strike just before the holidays, the real GRINCH, the little green one with a pyramid in the back, was stealing large swathes of Christmas value from right underneath everyone's nose.
Way to go, commuters, for keeping your eye on the ball!
Keep in mind that "Foreign exchange rates are always quoted in decimal points which are smaller than the actual smallest currency denomination. The reason being that rounding errors in exchange rates can be sizeable when dealing with transactions in millions of units."Guaranteed, the 2.7 percent value drop took a significant chunk out of Americans' aggregate purchasing power this Christmas. In other words, all the 'made in China' Christmas trinkets Americans bought during the week before Christmas cost Americans more than they would have cost the week before that!
So, how does this insanity work?
Most currencies traded on the Interbank market are floating-rate currencies, meaning that they are subject to the forces of supply and demand, and their exchange rates are determined primarily by the liquidity of the marketplace.This explains why the mere whisper of a hint that the FED will tighten or release the SCREWS on the US money supply sends money changers into a frenzy.
Another thing to keep in mind:
[E]xchange rates . . . almost always include the broker’s commission for the transaction. After all, even the simplest form of foreign exchange can be a very profitable business, especially when the exchanger has a captive audience.There you have it folks, they PROFIT, we BLEED!
So, what's the prognosis?
If Americans continue to buy more foreign goods and services than U.S. businesses can sell overseas, the flow of dollars leaving the country will increase and if foreigners do not invest heavily in U.S. assets, the greenback‘s value will fall.
I say good riddance to foreign investors! Don't let the door hit you in the back!
Americans should ditch this filthy corrupted currency and leave foreign investors holding the useless bag of bucks!