Display:

If a currency is used as a major trading currency it tends to become valued higher than it would be if it wasn't a major trading currency due to the fact people are buying the Euro would otherwise wouldn't.  The Supply/Demand ratio states the bigger the demand at a constant Supply means the Cost of that good will rise.  Which is nice for the Eurozone as the Euro will be worth 'more.'  

There are good and bad affects, effects, and aspects of this.  

isn't it true that only 10% of the US dollars are circulating outside the USA

Nobody knows, or at least I can't find, the amount of dollars floating around.  Thus, the answer is: I haven't a clue and I don't think anyone else does either.

by ATinNM on Sat Apr 22nd, 2006 at 12:45:20 PM EST
[ Parent ]
Thank you for the comment, ATiNM! I just want to ask you if the Euro appreciates, will this be worse for the Eurozone exporters. Worse because the prices of the goods, produced outside the zone will be supposedly cheaper for the customers in the Eurozone? So does this mean that the demand for imports in the Eurozone will increase as a whole? But then, a substantial part of exporters may decide to close their businesses. I guess that this will result in increase in unemployment rates and gov. spending. And this will be bad for the economy, so the ECB will have to keep the exchange rates of the Euro lower - as they used to be. And how is the ECB going to achieve it - by selling more foreign currency ,however, ECB is going to eventually lose from it, isn't it? And isn't appreciation a step towards inflation? So, it appears that a strong Euro won't be so good for the customers in the Eurozone, will it?
by Laura on Sun Apr 23rd, 2006 at 04:11:38 PM EST
[ Parent ]

Display:
Login
. Make a new account
. Reset password
Occasional Series