Credit Crunch Boosts Dollar

Although the dollar hit historic lows against other major currencies in July, many investors moved into the greenback to weather the credit crunch—thus boosting the dollar’s value, the Chicago Tribune reports.

“Since mid-July, we had a complete recovery [in the dollar],” said Kathy Lien, a currency strategist with FXCM. “It’s due to the market’s flight to safety, with speculators shaken out and parking cash in U.S. dollars.”

Nonetheless, traders and economists said they don’t expect the rally to continue due to further anticipated cuts in the Federal Reserve rate, ongoing credit problems affecting the entire U.S. economy and America’s trade deficit with a number of leading nations.

“The dollar’s going to continue coming under pressure. I don’t see it turning around,” said George Dowd, director of global trading at hedge fund Spectrum Asset Management.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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