Dollar Dilemma

The Dollar is all disappointed as it has declined almost by 7.7 percent against the Euro. The Finance Ministry is not worried about the currency’s relative value than the risks from sharp fluctuations. The world’s two biggest currency traders the Duetsche Bank AG and the UBS AG said that the “ declining in the volatility means the likelihood of buying and selling currencies in a concert to halt the dollar’s slide had dminished even with the greenback at record lows.

Finance ministers object to rising volatility because it complicates the assessment of economies, interferes with monetary policy and gives companies little time to adjust by cutting costs. Foreign Exchange Strategist says that “ its not about the levels but about the volatility they are concerned with.” “``If the dollar drops in a gradual fashion, they are unlikely to act. There's not really a meeting of minds as to when intervention is needed.'' On the other hand, the stronger euro benefits the Europe by helping to temper the inflation rate. But being weak is also helpful at one end that is a weaker dollar benefits the U.S. by giving a boost to exports which have increased 2 percent.