Weak dollar costs U.S. economy its No. 1 spot

Discussion in 'Economics' started by travelingtrader, Mar 15, 2008.

  1. http://www.reuters.com/article/newsOne/idUSL1491971920080314

    Weak dollar costs U.S. economy its No. 1 spot

    Fri Mar 14, 2008 5:17pm EDT

    PARIS (Reuters) - The U.S. economy lost the title of "world's biggest" to the euro zone this week as the value of the dollar slumped in currency markets.

    Taking the gross domestic product of both economies in 2007, the combined GDP of the 15 countries which use the euro overtook that of the United States when the European currency surged to a record high of more than $1.56 per euro.

    "The curious outcome of breaching this latest milestone is that the size of the euro zone's annual output has now exceeded that of the U.S.," the economics department of Goldman Sachs, the Wall Street investment bank, said in a note to clients.

    Taking official estimates of 2007 GDP -- $13,843,800 billion for the United States and 8,847,889.1 billion euros for the euro zone -- the economy of the latter passed the United States once converted into dollars, shortly after the euro topped $1.56.

    The dollar sank to $1.5688 per euro late in European trading hours on Friday, at which rate the euro zone's 2007 GDP equates to $13,880,568.4 billion.

    The 2007 GDP estimates are as published by the U.S. Commerce Department's Bureau of Economic Analysis and provided to Reuters on request for the euro zone by Eurostat, the European Union's statistics office.

    (Writing by Brian Love; editing by Stephen Nisbet)
  2. What makes a currency powerful or weak? How does one judge a currency?
  3. Mschlau


  4. What makes the value of a currency???

    Is the supply and demand for this currency.
    Example: when we buy products from Europe we are demanding their currency, therefore increasing its value, when we sell them our products we are supplying our dollars against the euro, therefore decreasing its value.

    Conclusion: The value of the Euro against the dollar is much higher due to the fact that we import more from them than what we export. In their case they export more to us than what they import from us. It is always a demand supply matter.

    Got it??
  5. Thanks jucesar2005 for the explanations. Thus, the law of demand and supply is very encompassing indeed.
  6. piezoe


    There seems to be some commas out of place here. I don't know what the correct figure is, but i am suspicious that it is not 13,880 trillion. Is the British definition of "billion" being used?
    Someone please tell me that it is 13 trillion in the US system of measurement and NOT 13 thousand trillion. Thanks.