Pound continues to plumb the depths against the US Dollar.
The last few weeks have been turbulent for the Euro and the Pound against the US Dollar.
The US Dollar, despite the inflation and concerns about the state of the overall economy in the United States is holding up more than well against the British Pound, with today's value standing at 1.25.
This is a very low value for the Pound, and the Euro is not fairing much better, as it has been sitting at around the 0.95 mark for a while now, having sparked talks of potential parity when it dipped below the 1-euro mark just a few weeks ago.
In reality, this is not really about the strength of the US Dollar, its more about the weakness of all three major currencies, the Pound, Euro and Dollar being subject to similar geopolitical and economic effects in a very similar fashion.
The official rates of inflation across the Eurozone, the United Kingdom and the United States is approximately the same, and stands at a 40 year high of around 9% in the United Kingdom and 8.3% in the United States, and some sources are insinuating that the United Kingdom has the highest inflation among the G7 nations.
This is really part of the picture. The other part of the picture is that whilst all of Europe and North America is subject to the same catastrophic situation in which the Euro and US Dollar are no longer accepted as tender for settling oil and gas contracts with Russian energy companies, therefore reducing their reference point as currencies linked to consumable commodities which has long been an attribute in their standing as major currencies.
The ruble has increased dramatically in value since Western nations have to settle oil and gas contracts in rubles rather than their own sovereign currencies. In essence, we now have witnessed the birth of the ‘petro-ruble’.
Therefore, what can be deduced is that the US Dollar appears to be holding up well if all that is being considered is Western markets and other Western major currencies.
When taking a global perspective and looking at the flourishing economies of Southeast Asia, India and in terms of currency, Russia, there is a link between the performance of the Euro, Pound and US Dollar and their associated national economies.
They’re basically all in serious dire straits, it’s just that the US Dollar is on less of a downward run than the Euro and the Pound.