The alter scale is the expense of the American dollar versus other currencies. The profit of the dollar is both caused and reflected by concern rates, and concern rates admit yet to act with inventory prices. Then, convert rates involve inventory prices and can be used to generate predictions approximately the mart.
Exchange Rates
A frail dollar funds American goods are cheaper overseas. It further way Non-native goods are added expensive. This suggests consumers Testament shop for American goods. It extremely mode that due to check is cheap, the economy Testament expand, now augmented businesses Testament built finance inventory, expand their Industry and live on to borrow bill. For the short word, cheap bread suggests the inventory market will show price rises across the board.
Interest Rates
The dollar is closely tied to interest rates. If stock prices begin to fall, foreign investors likely will liquidate some of their stock holdings, which drives the value of the dollar down. She also holds that when stock prices rise, there is a short-term trend toward a cheaper dollar besides, because this reflects an expansionary monetary policy. Therefore, at least for the short term, both rises and falls in stock prices lead to depreciation of the dollar and, hence, its reduction in value. This might sound odd, but it makes sense. Depreciation can develop from two causes. Therefore, the rise in stock prices resulting from a cheaper dollar leads to short-term price rises only.
Stocks and Bonds
When interest rates are high, dollars are expensive. As a result, money moves to the bond market, where the expected interest rate is the margin of profit. When rates fall, money moves out of bonds and into stocks, pushing prices upward.
Stocks and Currency
Interest rates can and do affect stock prices. The reverse is also true. According to a 2005 report by Russian economist Desislava Dimitrova, stock prices can affect the value of the dollar. A low rate will spur borrowing, while a high rate will retard it. All other things being equal, cheap money is good for the economy and manifests itself in higher stock prices. This works only for the short term, because stocks are always future oriented. If rates are low today, investors assume that they will rise soon. The first is a bad cause, and that is the liquidation of foreign holdings in stock. The second is a good cause, and that is economic expansion, which leads to cheaper money. In both cases, the value of the dollar falls in the short term, but for two very different reasons.
