Currency trading articles 8
How will Katrina continue to affect the dollar?
The initial affect of hurricane Katrina was rather expected. The dollar plunged as many investors feared that the extensive restoration costs will set back the U.S growth. Many traders felt that the immense insurance costs and repairs will postpone the interest raise the Federal Bank was expected to execute. The weeks after Katrina showed continual depression in the dollar rates in the forex market. Obscure forecasts and estimations caused some rapid changes in the dollar rate, but still no stability or real appreciation.
Recent statements made by Federal executives returned some of confidence to the dollar, as the Fed claimed that there is no reason Katrina should affect growth plans this year. The damage is expected to be truly felt only in the upcoming years. Many forex traders also noted that Katrina was a culmination of other factors causing some currency instability - Japan's recent elections, pushing the Yen up to new highs, the upcoming German election, causing some insecurity and depression in the Euro and the Chinese reform in currency regime.
Katrina has caused a substantial damage to the U.S Dollar, but not as many believed at the start. The damage will be felt in the future, but not in a boom. It will cause some recession in future growth plans gradually.
Peter Huckstable, Editor Team. September 14, 2005
