In November, the U.S. Dollar Index, which tracks the greenback against six major U.S. trading partners including the euro, yen and pound, rose 5.09%. This was driven partly by rising bond yields and signs of economic recovery that raised the appeal of U.S. assets. But the most recent gains also had to do with economic uncertainty in Europe. The region's debt crisis unfolded earlier this year with a bailout in May to prevent Greece from defaulting. Now it looks as if the dominoes might continue to fall as observers watch Portugal, Spain and others closely following the $113 billion bailout package European officials presented to Ireland on Sunday.
Earlier this week, the dollar soared against the euro and other major currencies when a rescue deal for debt-troubled Ireland failed to calm investors worried that the debt crisis might spread. At one point on Monday, a day after European officials announced Ireland's bailout package,the euro fell below $1.31 for the first time since September 21. The British pound fell to $1.5565 from $1.5602 and the dollar rose to 84.24 Japanese yen from 84.07 yen.
However, the dollar's rise in the backdrop of Europe's demise might likely be temporary. After all, the U.S., though probably not to the scale of Ireland and other European countries, has its own debt problems that officials are trying to solve. And some central bankers and even the United Nations have said the greenback's value has been too volatile to be the world's primary reserve currency.
It seems that the dollars strengthening is mor eof a result of Europes hardships than anything the United States is really doing. In some of the other posts I've read it sounds as though some aspects of our economy are coming back to life. Even with that being said it is not the economy as much as the environment that is strengthening the value of the dollar against other world currnecies.
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