[AceHigh]

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Probably not many more increases, but everyone's figuring on at least one more. At that's 1 more than the EU plans. With the deficit increasing this year the Fed tightening of the money supply has managed to strengthen the dollar.


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I don't believe that fed interest rate increases directly impact the dollar much....

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It definately does, because it makes American bond rates more attractive. The deficit does too. But France and Germany are starting to run deficits also. And it's likely the rates will be 4.5% vs. 2% for 2006, so that will keep US money relatively tight.

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FWIW, I just don't think rising/declining dollar is much of an issue for someone with there money in US markets.

It might be a reason to get into europe markets.

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I'm an active investor so I pretty much ignore the dollar. I don't feel I have the time or ability to invest internationally and am getting good returns in the U.S. market.

But if you are a passive investor, I think it makes sense to invest some of your portfolio internationally, say 20% or so just for broader exposure. An index fund is only useful if it gives you broad exposure to the market. Well there is more than a U.S. market, so why skip international exposure for your portfolio? That's the basic argument.

But the "world is coming to an end argument" is, as long as the U.S. runs large deficits, why not keep some of your money where investments don't lose purchasing power because of their currencies? Because of our deficits, if I was a passive investor I would definitely consider upping intl. exposure to 30-40% or more.

At least until we elect another Republican president like Clinton who'll balance the budget [img]/images/graemlins/grin.gif[/img]

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Not sure I buy the US investor putting money in Europe, at least I don't see it as protection for weak dollar when Ed is living in US and spending all his money in US dollars.

But I agree, us investors yearn for the days of the Republican/Conservative Clintons.