For the past few years, Americans as well as the rest of the world have slowly watched the downward spiraling decline in value of the U.S. dollar. Last night the American dollar hit an all time low against the Euro. The Euro closed out at $1.50 to the $1 of the U.S.. Although this seems like it is all good for the countries participating with the euro, it may not be. The rapid growth in value could actually prove to hurt business and maintaining an equilibrium.
In France the concern is more palpable, with politicians calling for the European Central Bank to intervene to put the brakes on the euro’s surge. Budget minister Eric Woerth this week called the “very high” euro “a handicap for our exports.
This high value of the Euro will give more purchasing power to the participating countries, and therefore they will most likely import more than they export because their money is worth more, and the cost of exporting would be too high for other countries to afford. The Euro was not the only value of money that the U.S. fell to, it also recorded record low value against the Japanese Yen. The government and economists of the United States need to figure out some solutions, because businesses such as automakers are already downsizing and trying to move their operations elsewhere, where it is not so costly to produce.
