US dollar will keep declining

US dollar will keep declining
# 19 December 2008 14:36 (UTC +04:00)
The dollar is also down versus the U.K. pound and Swiss franc.
This trend has also recently started to manifest itself in Azerbaijan. The dollar has started to go down and the euro to move up in Azerbaijan.
The dollar declined against the euro, heading for its biggest weekly loss since the 15-nation currency’s 1999 debut.
The euro was trading at about $1.43, the pound at $1.52 and the yen t traded at 87.8 versus the dollar.
Japan’s currency appreciated about 26 percent against the dollar this year, the most since 1987, as more than $1 trillion of credit-market losses sparked a seizure in money markets and threw the world’s largest economy into a recession.
In Azerbaijan, the dollar traded at AZN 0.8013 and the euro at AZN 1.1433.
Experts say the dollar depreciation will be further affected by the deepening recession in the US economy and the US monetary policy. According to projections, the dollar depreciation has already gained a flowing nature and the US currency is likely to continue plunging for a long span of time.
The Fed cut its target rate on Dec. 16 to a range of zero to 0.25 percent, from 1 percent, below the Bank of Japan’s 0.3 percent rate. The central bank reiterated plans to buy agency debt and mortgage-backed securities and said it will study buying Treasuries.
The federal budget deficit widened last month to more than $164 billion compared with a gap of $98.2 billion in November a year earlier, the Treasury Department reported last week.
By flooding the economy and financial markets with dollars, the Fed’s extraordinary moves do not come without a hitch, however. Many investors believe that the Fed’s actions, in combination with a federal budget deficit headed toward $1 trillion or higher this year, will spawn a renewed bout of inflation once the economy gets going again.
As to the trends in Azerbaijan, the dollar dropped 0.9% while the euro went up 11.4% in early December at a time when the euro rose 12.6% against the dollar on world markets.
However, Azerbaijan’s switching to a bi-currency basket containing the US dollar and euro provides a range of distribution of the fluctuation.
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