Dollar rebounds on global economies’ weakness

Posted August 27, 2008

The driving force behind the dollar’s comeback, after six years spent mostly in decline: the perception that, even though the U.S. economy is struggling, things are rapidly getting much worse in other countries. Currencies tend to reflect the strength of their home economies, so the buck now is gaining at its rivals’ expense.

by Tom Petruno, Los Angeles Times

Baltimore — (TFN): The way things are going with the dollar, the cost of a London, Paris or Australia vacation may soon be back within the realm of possibility for some Americans. The formerly weakling greenback has been on a hot streak since mid-July, racking up big gains against many other currencies.

The dollar’s rally against the British pound has been particularly striking: It took $2 to buy one pound on July 15. Now the cost of a pound is about $1.83 at the official market rate (the rate for large transactions), an 8% drop in six weeks and the cheapest the British currency has been in two years. The euro, at $1.473 today, is up a bit from the six-month low of $1.465 it reached on Tuesday, but still is down from $1.59 in mid-July.

The Australian dollar is worth about 86 U.S. cents, down 12% from 98 cents six weeks ago…

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