Question:

Why is the euro stronger than the dollar?

by  |  earlier

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or why is the dollar loosing power?

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3 ANSWERS


  1. The relative values of the dollar and euro are determined by the supply and demand for each currency.  The demand for dollar-denominated items can be thought of demand for goods&services and the demand for capital goods like real estate and stocks and bonds.  

    The threat of inflation can make dollar-denominated goods seem like they won't be as valuable in the future, making worth less now.  This reduces the demand for dollar denominated capital goods.  The value of the dollar will naturally fall until the supply and demand for it and the euro reach equilibrium...as the value of the dollar falls, US goods seem cheaper and the demand for US goods should increase.  


  2. Cuz it is the beginning of a inflation...we make too much money so it becomes not worth as much

  3. There is too much money in the American economy right now, so the purchasing power of that money is diminished. Simply put: the supply of money is larger than the demand for that money and the value of our currency relative to the rest of the world is low.

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