We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

The Euro's challenge to the dollar - Essay Example

The paper attempts to find out whether the Euro can challenge the US dollar in the coming years and replace it as the reserved currency. A leading international currency that belongs to a dominant economy (country) is known to have the following characteristics (Winecoff). 1. The dominant country behaves as a creditor to other nations. 2. The dominant economy means a large volume of trade with other countries. 3. The currency must maintain its value without violent fluctuations because that creates uncertainty in the business transactions. 4. There has to be an open, fluid and deep market in the currency. During most part of the time after WWII, the US dollar has been seen fulfilling above conditions. During 80s, Japanese yen and German marks appeared to pose a challenge to the US dollar; however, the threat could not sustain for a long period of time for various reasons. By the turn of last millennia, German mark got merged into Euro and then, for some time, it appeared that Euro could pose a serious threat to the US dollar. However, the Euro can really challenge the US dollar or not will largely depend upon two major factors: how other states in the European Union decide to join Euro land, especially the UK; and secondly, how macroeconomic policy parameters in the US dictate the journey of the US dollar in reference to its value against other currencies (Chinne & Frankel). In other words, the question is how much confidence the world community will repose in the US economy and its currency

Check these samples - they also fit your topic

Hedging against a Weak Dollar
The paper tells that in globalized marketplaces, the necessity to deal in foreign currency is inescapable. The process of acquiring a foreign currency for foreign business activities can be daunting, requiring business forethought and prior contractual arrangements. Currencies change in value all the time, and the process of exchanging a currency for another can be a risky and dangerous process that can cause numerous losses.
8 pages (2000 words)Essay
Dollar General
One has been privileged to be part of Dollar General as a Category Supervisor in charge of organizing and managing the products offered at the store, monitoring inventory levels, determining vendor information, and projecting changes in demand and supply.
2 pages (500 words)Essay
Economics _ Whither the Dollar
Both the Keynes’ and the White’s plans give much proof the experiences of the interwar period have been analyzed in great detail. Both recognize the need to control short-term capital movements and to a degree to drift away from the hypothesis of a free exchange system.
5 pages (1250 words)Essay
Time Value of a Dollar
Investors also use this theory with the help of risk free rate return calculations to determine its future value, and thus decide if an investment is viable. It is very important that the future value of the dollar be protected with strict policies for it is the world’s reserve currency.
3 pages (750 words)Essay
Comparative Study of US Dollar and Euro
Introduction The development of economies of countries worldwide is primarily depended on their potentials to promote their currency in regard to global trade transactions. US Dollar is used for measuring the value of petroleum and gold, goods that are of primarily importance for global economy.
8 pages (2000 words)Essay
Dollar Decline
The effects can appear in the form of increased level of export activities, minimizing purchasing power of the individuals on an international basis, rising commodity prices and upward trend of interest rates. The declining value of dollar is likely to unfavorably affect the purchasing power of the US citizens due to increased price of commodities (Feldstien, “The Declining Dollar”; Hammer, “7 Economic Consequences of a Dollar Collapse”).
5 pages (1250 words)Essay
The Expectations of the Dollar
6, after reports showed a record deficit in the U.S. current account and retail sales declined. Market opinions are afloat that we might be in a period of dollar weakness as present US data is supporting the notion the Fed will go only about one or two more times for increasing the interest rates' .This quite overlooks the fact that the Fed has raised its benchmark overnight lending rate 14 times since June 2004 to 4.5 percent from 1 percent, to prevent the economic expansion from overheating.
8 pages (2000 words)Essay
Economics GCCs Dollar Peg
This proposition had brought in lot of foreign capital investment in the country while providing a support base for the dollar. But during the last couple of years, when dollar started coming under pressure and it became weak as compared to other major currencies around the world like the Euro, the gulf nations started feeling the pinch.
2 pages (500 words)Essay
The High Australian dollar
The essay found that, the increase in the value of Australian dollar has both short term and long term impacts on various sectors, for instance, unemployment rate, economic
7 pages (1750 words)Essay
Spaghetti Challenge
An analogy is a comparison of two things; the spaghetti task as described in the presentation has the instructions, the constraints, the penalties and thee bonuses. All those are also provided for in a real-world big scale construction project. They ensure that the
4 pages (1000 words)Essay
in the coming years. Needless to say that Euro's own performance is equally important in providing economic stability in the European Union that will continue to expand over time. It is important to note that even after more than a decade of the Euro launching, some of the major Member States of the European Union that include Britain, Denmark and Sweden has preferred not to adopt the Euro as their currency. Currently, the Europe is passing under unprecedented financial crisis and economic recession that began during 2008 has created huge economic turmoil in the countries such as Greece, Spain and Italy that form a part of European Union (European Commission). The Euro zone has plunged into a crisis due to some of its member countries violating fiscal measures with huge deficit spending for political gains. For example, Greece's sovereign debt crisis had its roots in its massive spending through huge deficit budgeting, misreporting, and economic mismanagement. In 2010 Greece was provided with a bailout package to the tune of $163 by the European Central Bank; however, that was not enough to rescue the nation. Greece was provided with another bailout package in 2011 to the tune of $178 billion along with the deal that forced private parties to write-down the Greek debt; however, that was not enough and terms were again altered in 2012. So is the case with Ireland and Portugal, Italy and Spain (Alessi). The ongoing crisis has eliminated the possibility of the UK entering into the Euroland for at least couple of years until the crisis gets resolved and the Euro gets stabilized with an international perception that the euro will be able to maintain its value. Low inflation rate is another criterion for becoming a reserve currency and that, of course, is not uniformly met in entire Euro zone (Chinne &


Name Surname Supervisor Subject Date The Euro’ Challenge to the Dollar The Euro began its journey on 1 January 1999 when 11 original Member States from Europe agreed to float a common currency. Currently, Euro is the official currency of the 17 euro area countries with a population of 330 million…
The Euros challenge to the dollar
Read TextPreview
Comments (0)
Click to create a comment or rate a document
Let us find you another Essay on topic The Euro's challenge to the dollar for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us