Why is the dollar still weakening against the euro after the fed introduced

[yrrej_ie]

the stimulas package? isnt the fed announcement meant to strengthen the currency?

 

[Mike]

Quantitative easing weakens the dollar instead of strengthening the dollar since more money is put into the M3 money supply. Although the fed claims that its main purpose is to drive down interest rates, many believe that the main reason is to weaken the dollar so that US companies will have a competitive trade advantage.

The 6 months prior to the credit crisis, the US dollar approached $1.60 to the Euro and US exports were booming. The US main competitors are Europe and Japan and with a weak dollar against those currencies, airplane, heavy moving equipment, heavy machinery, and high tech (both hardware and software) exports should increase significantly. Also with the weak dollar, more plants by foreign companies (eg. autos) should be built in the US to remain competitive in US pricing.

 

[Lawrence E]

No, it's meant to strengthen the economy. However, the weakening is not drastic. Commodities skyrocketing and causing inflation is the real worry.

 

[Toni]

The government is buying treasuries and securities.
They have no money, they are essentially printing it.
They are issuing treasuries, and buying them up themselves.
I call it fake stimulus that will only skyrocket inflation.
This weakens the dollar...

 

[john w]

That was the plan, stimulate the economy by devaluing the currency thereby making American exports more competitive on the world market and making imported items more expensive amongst other things. A strengthening dollar would hinder the economy. Of course, it's just a matter of time to see if the Chinese do something to prop it back up as they like having the trade imbalance in their favor.