CBS Correspondent Anthony Mason would probably call it the not-so-almighty dollar, and he’d be correct if
“[T]he weak dollar is really wreaking havoc on investor confidence and in many ways, the impact is just beginning to be felt,” Mason said on CBS’s November 12 “The Early Show.” “The dollar, once the gold standard of currencies, is falling hard and fast around the world. At $1.46, the euro is up nearly 12 percent against the greenback. The yen traded at 110.38 per dollar, an 18-month high. And for the first time since 1976, the Canadian dollar has risen over 20 percent in value against the U.S. dollar at $1.06.” (Click here to see video.)
But while the dollar is lagging, some experts think the dollar is undervalued.
“Though the dollar is grossly undervalued and it may not be far from the ultimate trough [versus the British pound], the market is likely to push it lower,'' said Stephen Jen, Morgan Stanley's London-based head of currency research, according to Bloomberg on November 10.
The weakness of the dollar stems from the world view of the
“The dollar’s slump, particularly in the last six to 12 months, is because these currency markets think that the
Mason also partially blamed the decline of the dollar for the rise in oil prices.
“[Y]ou go to a department store in
However, a closer look at oil as it relates to the fall of the dollar suggests there’s more at play than just currency inflation. According to Dr. Mark J. Perry, a professor of economics and finance at the
“A weak dollar doesn't justify $100 [a barrel] oil,” Perry wrote on his Carpe Diem blog. “Since Aug. 22, the dollar is down by only 8% against a basket of currencies while the oil price has risen by 40%.”