Over the last decade of 2011, the dollar has significantly strengthened against the euro and the ruble. This has caused bewilderment to many analysts who previously predicted the collapse of this world currency. The essence of this process consists of several aspects.
Instructions
Step 1
First, many investors and businessmen are looking for reliable protection of their capital in times of crisis. In their opinion, it is American financial instruments, i.e. dollar. As a consequence, they begin to acquire as much of this currency as possible in order to support themselves during the crisis. It is difficult to say how justified this strategy is, since, according to many forecasters, the dollar will inevitably fall. This is due to the shaky macroeconomic situation in the United States and the instability of financial institutions that suffer from budget deficits.
Step 2
Second, the dollar's appreciation is linked to traditional confidence in the liquidity of America's financial instruments. For the past 50 years, investors have preferred this particular currency to invest their funds. Of course, now no one can guarantee the safety of capital, because the current situation in the global financial market is very precarious and confusing. But there are still those who still believe in the dollar. It is possible that in a few years the situation will change, but not at the moment.
Step 3
Third, the increase in the value of the dollar is due to its deficit. And this, in turn, is a consequence of the impossibility of repaying loans, in which not only the whole of America, but also the world is mired. Many economic entities are in dire need of this currency and therefore get rid of all other surplus assets. The US Federal System simply doesn't have time to print more banknotes. Be that as it may, the rise in price of the dollar will not be constant, since it will face an inevitable decline, all due to the same budget deficit.
Step 4
Another reason for the current market situation is the decline in the price of the euro against the American currency. As of fall 2011, the economic situation in Europe is significantly worse than in the United States. Therefore, the euro cannot influence the global trend in any way. If the dollar rises against the euro, then it rises in comparison with the ruble.
