Currency comeback

The forecast of the paths of exchange rates has always been a tough assignment for economists.

The past financial crises didn’t make it any easier, but analysts mean that the dollar’s decline against the euro and some other leading currencies will go into reverse. Researchers found out that the European central banks have more room to cut rates than in America, but the outlook for growth is even worse than in America.

Although the shrinking American interest ra tes and the exchange rates on Treasury notes in bad conditions, which define generally the demand for a currency, economists point out that if 2009 brings a currency crash, the dollar is unlikely to be the victim.

http://www.economist.com/theworldin/displaystory.cfm?story_id=12494697
Wouter Staelens