The wallet of all that use the U.S. Dollar to purchase goods just got a bit lighter this morning. The U.S. Dollar Index is now trading lower by 0.52 cents to $78.43. The U.S. Dollar Index has declined by $2.87 cents in just the last eight trading sessions. This is a very sharp decline in such a short period of time.
The decline in the U.S. Dollar comes as food riots are breaking out around the world due to inflated food prices. The Chinese President, Hu Jintao, is in town visiting the White House this morning. He has been very critical of the weak U.S. Dollar as of late. He has also stated that he would like his currency called the Yuan to be the reserve currency of the world. Many American politicians including U.S. Treasury Secretary Tim Geithner have asked the Chinese to allow their currency to float and trade in the open market. At this time only a small percentage of the Chinese currency is allowed to be traded in the open market. Everyone knows that the Chinese move on Chinese time and will not be pushed by what the American politicians want. After all, the Chinese do own nearly $1 trillion in U.S. debt.
The decline in the U.S. Dollar Index this morning just gives more evidence that the Chinese might be correct in keeping their currency pegged to the U.S. Dollar. Why would the Chinese allow their currency to float higher when the Federal Reserve Bank manipulates the U.S. Dollar via it’s quantitative easing program? Nearly everyday the Federal Reserve Bank buys billions of dollars worth of U.S. Treasuries creating huge cash reserves and causing inflation around the world.
Goods for all that use the U.S. Dollar have become more expensive today. U.S. Consumers are now paying over $3.00 for a gallon of gasoline. All commodities have soared around the world due to the fact that all commodities trade in U.S. Dollars. However, the retirees in the U.S. are feeling the weak dollar the most as inflation increases and the value of the currency they use to buy goods declines. Everyone who uses the U.S. Dollar just lost a little more purchasing power this morning.
Nicholas Santiago
InTheMoneyStocks.com
