Sliding greenback boosts economy

Essay by jacoCollege, UndergraduateA+, March 2005

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Journal Date: 20 May 2003

Title: "Sliding greenback boosts economy", South China Morning Post

Author: Kelvin Chan

Summary:

Not only Asian countries cannot recover their economies, but also in US, she is suffering from the economic down turning for a long time, after the worldwide economic deterioration.

In recently, US dollar's deepening slide against the euro and other main currencies. Thus, the lower level dollar exchange also occurs in Hong Kong, because of the linked exchange rate with US dollars. However, according to some economists and business leaders said, this phenomenon would cause some positive effects on Hong Kong. For instance, the lower costs and prices, and it will lead Hong Kong to be a more competitive city.

Actually, many investors started to sell greenback since the US Treasury Secretary hinted that the US government was abandoning its strong-dollar policy to boost economic growth. While US is facing the suffering of economy; in contrast, people in Europe are enjoying the increase in purchasing power because of currency movements.

In Europe, many businesses are using US dollars, as their currencies; therefore, the falling in greenback will cause an effect on increasing exports of these countries.

In addition, some professors point out that, although the slide of US dollars cause out a benefit to Hong Kong, there only has very little effect on it; it will only slightly pick up the export of Hong Kong, because most of Hong Kong's imports are from the same places its exports go to.

Analysis:

In the past, US mainly concerned on how to apply the policy in order to strong US dollars. And many investors like to hold greenback as their currencies, because of the stability of US dollars.

Indeed, the higher US dollar can have several advantages. One of the...