US Dollar Rising - A Canadian Perspective

Why is the US Dollar Rising when it should be devaluing as they are printing money out of nothing?

The reason is - relativelly - simple.

The US needed $700 Billion. The world banks agreed to help them raise it, by increasing their respective holdings of US dollars.

For instance, the Bank of Canada announced they would TRIPLE Canada's holdings of available US dollars, from $30B to $90B.

All the other countries were doing (larger of course) the same thing. This was in a world effort to fight this unbeatable imploding world economy.

They can't all buy these large amounts of dollars over night. It takes weeks or even maybe months.

But sadly, when they all start unloading them, it could even take years; the effect will be horrible to the value of the US dollar. That won't be happening for maybe 5 or 10 years from now.

In the meantime, demand is very high (artificially) for the US dollar. Until all the banks have reached their targets, and then it will start to drop back. It has nothing at all to with how good Canada's economy is doing compared with the US economy.

The drop in the over night rate would have a negative effect on our dollar in any case. It's just another smaller component.

Additionally, it's interesting to note how this $700 Billion was timed just before the US election. Everyone knew it would artifically bring the US dollar higher for voters to see the US is not doing as bad as they all thought under the Republicans. (sarcasm) .

Interesting.