Could this move by the treasury to provide liquidity to the commercial paper market devalue the US dollar?
Answers
312 points
Market101 answered one year ago …
Well not just that, but lowering interest rates by a half a point today will also cause the dollar to drop. Currency is a tough bet right now considering several foreign nations have started to fall into a similar state of decline that the US has been facing all year. I'm looking at commodities right now to be honest.
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380 points
SirCrashton answered one year ago …
Short answer: yes. More dollars chasing the same goods and services always reduces the value of one's currency.
I posted a longer answer under "Personal Finance" to chidog47's question: "Is now a better time than ever to invest outside the U.S. or commodites?"
2082 points
alanj answered one year ago …
Yes. However, the other countries around the world of different currencies are also doing almost the same thing. So, the result will have very little effect on the value of the dollar in relation to other currencies. It would normally bring on higher inflation. But with the economy the way it is, and lower oil prices - these are deflationary . It will probably not be able to overcome the deflationary forces that are in play. The result- higher dollar. Right now the dollar is overbought. I would expect a pullback soon before continuing higher. But, it is in an uptrend in an overbought condition, which could continue for a while. It would depend on how much new money investment money is pumped into it. This would drive it higher.
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