The dollar/">dollar keeps sinking amid near-global concerns about the future of the U.S. currency. Analysts forecast that the greenback will remain weak on the world market in November, and therefore the Russian ruble will trade at around 24 against the dollar. As a result, the Russians could find it increasingly difficult to save up as all the currencies grow cheaper.
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The countries that depend on economic growth or an economic downturn of the United States have become more wary of inflation rates. The weaker dollar leads to devaluation of assets and lower industrial output. European countries whose currencies trade freely against the dollar are concerned about the rising euro – a tendency that has a negative impact on their exports. The slumping dollar can also push up inflation in countries whose currencies are pegged to the dollar e.g. Russia.
“The dollar continues its slide against all major currency pairs. The trend stems from a widely expected cut to 0.25 percentage point in U.S. interest rates,” said analysts at Soyuz commercial bank, in an interview to Bigness.ru. “The latest data concerning consumer confidence, which turned out worse than expected, also played a role,” analysts added.
Although the U.S. economy showed a better growth rate (1 percent higher than forecast) in the third quarter, the dollar kept going down. “We witness the effects of a long-term crisis in progress,” said Doctor of Economy Eduard Panin, a professor. “We can be certain that considerable problems are waiting in the wings for the U.S. economy in the year 2008 too, and the Federal Reserve will have to go on cutting interest rates,” Prof. Panin added. According to Panin, the dollar appreciation is highly unlikely to occur in the future.
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