The Fed Effect - Impacting The Value Of Currencies And Assets Across The World

The Fed's move to stimulate the economy is in the face of expectations that it could slip back into recession if left to itself

. The move of quantitative easing also implies that the Fed is signaling a weaker dollar regime. A weaker dollar should make exports from the US cheaper and prop the US industry. However, a massive quantitative easing program could make it difficult for the US to reverse the process quickly, once the economy picks up, and is likely to result in a subdued US dollar in the medium term. As and when the US economy picks up and the US Fed starts to reverse its monetary policy stance and sucks out liquidity from the economy the dollar should begin to stabilize and move upwards. However, how quickly this will happen is an answer that has been elusive, with the US economy remaining sluggish for an elongated period of time. Hopefully, an early turnaround in the economy should bring cheer to the dollar and the global economy in general.

The Fed Effect - Impacting The Value Of Currencies And Assets Across The World

By: Cedric Welsch

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