In the amid expectations of lower interest rates in the United States,two weeks ago the dollar hit a new low of $1.60 for the euro and it may be possible that the rates may be higher in Europe.The leadres of Europe and President Nicolas Sarkozy of France are alaemed by this decline of dollar and this decline may have devastating effect on Europe’s exports.

After that dollar has strengthened closely at $1.55 Tuesday — and some economists say that even if it creeps down slightly, the dangers of a precipitous fall, at least against the euro, have subsided.As a weak currency has increased the cost of oil and other imports for the American consumer, it is pointed out that American policy makers, particularly Ben S. Bernanke, the Federal Reserve chairman, have begun to voice concern about the dollar’s fall and its inflationary effect in the United States.
Vincent Reinhart, a resident scholar at the American Enterprise Institute said that he is shocked by Bernanke’s concern about prices when he talks about the dollar as a factor in inflation and former director of monetary affairs at the Federal Reserve expressed that the balance is shifting toward a little more concern about the dollar. By this all all-out collapse of the dollar many economists acknowledge that such a collapse could occur if overseas investors,fearing a relentless decline, start dumping dollars from their portfolios — accelerating exactly what they fear might happen.

Categories: Business
Tags: collapse, currency, decline, dollar, euro, Import, inflation, prices, signs