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Saturday, September 9, 2017

USD has reached new low!

Is the USA deliberately devaluing its currency or people are losing faith in the USD?

The USD has been falling for the past 1 year and is still falling because of the colossal debt problem in the USA. Trump has kicked the can further down the road but still cannot resolve the debt problem except to extend the debt limit again.  There is no doubt that the USA will cross the $20T debt amount with little foreign reserves in its coffer and increased military spendings.

Hurricane Harvey has already done substantial damages to Texas and Hurricane Irma will be worse than Harvey.  Furthermore, meteorologists have detected 2 more hurricanes forming alongside Irma which will also slam into the USA.  The government definitely has to spend billions on the hurricane damages and require more fund raisings in the bond markets.  Insurance companies also will suffer due to substantial payouts and need to raise monies too.

All these don't bode well for the USD because monies are not put to better use other than damage control and repair.  Conversely, if these monies are used for economic developments, the USD will become stronger instead of weaker.

1 comment:

Eric Ho said...

The fed may not hike rates due to hurricanes.

This will definitely make the USD maintain its weakness.