Two Troubled Currencies – Which One is Healthier?

Posted by Allison on 15 August 2011, 14:02

Most people are aware that the British pound is lower in value than it has been against the Euro and the US dollar in recent times. This is to be expected since we have gone through a tough recession.

But what of the situation between the Euro and the US dollar; how have they managed to cope against each other? The Euro has had to exist in a situation where some European countries are in enormous debt. The US dollar now exists in a country that has had its credit rating reduced for the first time in history. So how are they coping with each other?

The US dollar was picking up 0.7012 Euros at the end of July, when the US government was trying to come to an agreement over the debt ceiling and the European countries were trying to agree over various debts and situations occurring in the Eurozone. One day later when August trading was underway, the figure had dropped slightly to 0.6937, going in favour of the Euro as a result.

But as it turned out the first half of August would be a very tight affair. One day later the figure had gone back in favour of the US dollar, changing to 0.7057 by the end of the day. And once again we saw a similar tug of war pattern by the following day as we swung back to 0.6993 again.

People were definitely getting a little unsure of how to deal with these two currencies while the situations in the respective parts of the world played themselves out. Perhaps the two areas balanced each other out though, because by the time the 12th August arrived – the last day for which we currently have figures – the exchange rate had gone back to 0.7017.

One wonders which of the two currencies will start to get the better of the other now that the US has been downgraded and the Eurozone is coping with debt laden countries. Debt is certainly the word of choice at present – but how will it affect these currencies on the currency converter in future?

 

Comment

  1. This is the kind of situation where things will take months to change in any real way. We might see slight improvements here and there but the Euro and the US dollar have too much going on in their respective parts of the world at the moment to make any real difference to how things are going.

    I can virtually guarantee that we’ll see no real improvements to either of these for a while.

    — Ben · Aug 30, 12:43 PM · #

  2. The US dollar is definitely having rough times at the moment. But I don’t think you can compare these to the situation the Euro is in. This is where things get really edgy because this is a currency that is struggling to stay alive. It is very different to the US dollar, which is just in a hard place. The sooner the Euro disappears the better, in my opinion. Does anyone agree?

    — CShort · Sep 28, 12:45 PM · #