The world's currency mystery

Article Abstract:

The underperformance of United Kingdom stocks has been linked to a high value for pound sterling, yet a drop in currency values for Asian economies has also been linked to a drop in their stock prices. High currency values affect exporters, but improvements in earnings can lead to high stock prices and currency values. Productivity improvements can also boost earnings and help improve trade balances so currency values. Currency rises may mean that inflation expectations are reduced. Assessments of risk levels may change and perceptions of increased risk may lead to stocks and currencies being sold together, which may be what has occurred in Asia.

Foreign exchange, Asia

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A message from the currency markets

Article Abstract:

There is a link between world stock prices and changes in the value of the US dollar. Stocks tend to perform well when the dollar rises, and they tend to perform badly when it falls. Markets expect the dollar to drop, and this could mean that stock prices will not perform well. It is not clear, however, that the dollar will drop, nor is this correlation always likely to hold. Previous forecasts of a drop in the dollar's value have been proved wrong, though there are good reasons to believe it will drop.

Prices and rates, Dollar (United States)

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