1. THE FLUCTUATIONS OF US
DOLLAR & ITS EFFECTS
TOWARDS THE WORLD
ECONOMY
NAME MATRIC NO.
LIM SHI YING (LEADER) BG 0911 0373
LEE KIT YI BG 0911 0329
LIM WOON SIN BG 0911 0374
SHALANI D/O NADARAJAH BG 0911 0278
TAI SIANG YING BG 0911 0111
TANG HWEE PING BG 0911 0093

2. INTRODUCTION
significant dominant currency
roughly two thirds of all official
US DOLLAR exchange reserves
denominated in more than four-fifths of all
foreign exchange transactions
lead the purchasing power of US
consumers
Mid -2009 , began to turn
down again

3. OBJECTIVES
 To investigate the factors that influence the US
dollar.
 To determine the impact of the US dollar fluctuation
towards the world economy, and the countries that
have been affected the most.
 To evaluate the policy that has been implementing
to the fluctuations of US dollar.

4. FACTORS INFLUENCE U.S. DOLLAR
 Trade deficits
downward pressure dollar value
 Housing bubble
speculation in house value
 Size and liquidity of U.S asset markets
the foreign central bank increase foreign reserves
 Interest rate
Treasuries declines, the investment is less attractive

5. CONTINUED…
 Currency peg
weaker currency would peg itself
 Market psychology
expected the future path of dollar
 Inflation
purchasing power of currency
 Gold fundamentals
dollar decrease, gold increase.

6. THE EFFECT OF US DOLLAR FLUCTUATIONS
TOWARDS THE WORLD ECONOMY
 Gradually depreciation
- rebalancing of the US current account deficit
- strengthen domestic demand
 - broaden world economies
 Sharpen depreciation
 - Weak domestic demand
- decline in export

7. CONTINUED…
- lower growth in the countries who rely on export to
US.
- Lead to rising inflation
 Dollar appreciated
 - increase the purchasing power
- increase import demand, stimulate exporter
countries economy growth.

8. THE COUNTRIES HAVE BEEN
AFFECTED THE MOST
 The Economy of the Middle East
 The economic conditions in the United States
 The impact exchange rate is seen on oil demand and
supply.
 Japan and China.

9. CONTINUED….
 affects the output of the East Asian economies in
both trade and foreign direct investment.
 Affects India’s economy.
 The value of total U.S trade with Africa had
increased.

10. POLICY TO RESPONSE
 1) Government direct intervention in the Foreign
Exchange
- Treasury buying or selling foreign exchange
 2) Monetary policy
- changes of interest rates

11. CONTINUED….
 3) Fiscal policy & Federal debt
- Government’s spending and taxing
 4) Lower foreign trade barriers
-boost the demand for U.S. goods and services

12. CONCLUSION
 depreciation of U.S dollar value has great
influences
 World economic effect
 Policy response
 Eurodollar