EXCHANGE RATE REPORT Essay Example | Topics and Well Written Essays - 500 words

EXCHANGE RATE REPORT - Essay Example America’s economy is largely service based, and its currency generally strengthens when the economic activity in the country is strong. If economic activity slows, dollar weakens. Compare to USA, the economy of the European Union which represents euro focuses more on manufacturing sector which represents a greater percentage of GDP. Euro strengthens when the economic activity in the European Union is strong, and weakens when the economic activity slows. It also weakens if disagreements arise regarding monetary policies among the members of the European Union (â€Å"CURRENCY: USDEUR’’). From many decades US dollar is serving as a major international reserve currency and is one of the major reasons of the status of the United States as a global super power. But, in recent years it faced increasing pressure from European currency, euro. In its early days of introduction, the euro remained weaker than the dollar. Later it shows a stable upward trend and getting stronger against dollar. But, from the last one month US dollar is getting stronger against euro. On December 24th exchange rate of 1 US dollar was 0.763417 euro. On 23rd exchange rate of 1 dollar was 0.765462, and on November 25th, it was 0.750694 euro. On November one, exchange rate of 1 US dollar was 0.718081 euro. If we take the trend of exchange rate for the last one month, we can notice that US dollar is getting stronger against euro on the average basis (â€Å"CURRENCY: USDEUR’’). Many factors played their role in the strengthening of US dollar against euro since last one month. From the past few months U.S economy is growing faster as the investors considered USA as a safe haven for their investment. Demand increased for dollar exports contribute to strengthen dollar. On December 16th, the USA central bank cut interest rates to an all time low, a move aimed at reassuring financial markets and stimulating banks to lend money. American dollar is the currency