Scalzi on the abysmal exchange rates of the moment:
…in the long run it would be nice to have my home currency seen as stable and having value. The cynical part of me wonders how much the global perception of the dollar will change simply by having a new occupant in the White House on January 20, 2009. I guess we’ll find out.
That’s an interesting question, isn’t it? I’ll admit that I know very little about economics or all the arcane factors that influence how well or poorly we’re doing as a country — I find even simple 401k investments utterly baffling and intimidating — so I have no opinion on this idea myself. But I do wonder just how much psychology and prestige plays into something like the value of a nation’s currency. Anyone have any thoughts?
I will say that, if there’s anything to this, a post-election rebound for the dollar would be excellent news for me, as The Girlfriend and I have been talking about finally taking that dream trip to Scotland next year…
I don’t think it is about “perception” directly, but political events certainly affect the moods of the investor and can cause considerable stock market swings worldwide. That, in turn, can affect trade patterns and national currency reserves… and a few hops down the chain, the relative strengths of currencies can also be affected. That being said, I doubt that there can or will be a strong causality effect between the results of election and the global economic turnaround.
On a personal level, I am being paid in GBP these days – the farther dollar falls, the more I gain… I should be back on American soil by the time of your trip, Jason, thinking about my upcoming European trips the same way you are 🙂
Ilya beat me to the punch (remember, we work for the same investment bank).
Currencies trade on the open market (just like oil, by the way). The value of the U.S. Dollar is not something the President controls, nor is it a public opinion poll on the his performance. Like all commodities, it’s price is based entirely on supply and demand.
Ilya’s point about the moods of investors relates to risk, and when the United States pursues strategies (political, fiscal, military or otherwise) that put the American economy at risk, *THAT* can affect the currency, but to suggest that the low dollar is some kind of referrendum on Bush’s competence is just John’s rather slanted politics talking again…
All of the above said, if the next President promises a significant change in fiscal policy, I think that could move the markets. Given the currently flagging economy, that strikes me as likely. But again, we’re talking about fiscal policy moving markets, not perception about a particular individual.