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<h3>Is it possible that EURO will surpass USD and become the world\'s strongest currency ?</h3>
 
A) BACKGROUND 
 
1) US Dollar was adopted by the Congress of the Confederation of the United States on 6th July 1785. U.S. dollar is the currency most used in international transactions. Several countries use the U.S. dollar as their official currency. However, as of December 2006, the dollar was surpassed by the Euro in terms of combined value of cash in circulation. 
2) US supported by the research and development in all area of commercial infrastructure, became the leader in Business, Commerce, Technology and a guide / help to the developing nations. 
3) However, it is imperative to remember that the Dollar has a background of War in promoting the relative parity with reference to other world currencies. US and UK were the 2 giants who fought the 2nd world war (1939-1945) and won with the surrender of Japan and Germany. 
4) This has imbedded a “hero” background to both USA and UK. The result was that both these nations had started meddling into the affairs of “other weak nations”, by an assumed power as the care takers of the world nations. 
 
B) US DOLLAR 
 
Please refer to “ A push to George (in ) Bush at http://www.drvsrs.com/sedsgo.htm 
 
1) Supported by the historical strength of the Dollar, US attracted a large volume exported items and made the best talents to immigrate to US, by paying a low dollar value compared to what the same will cost in US. 
2) US started funding other weak nations both for technical as well as to fight wars, and slowly controlled them as a non-recoverable and bonded debtors. In addition, US got involved in fighting in other’s lands, by framing a logical war situation to convince the world. This was at the cost of US budgeted funds for domestic developments. (Example : Up coming conflict with Iran, recent war in Iraq. Past history in Korea, Vietnam etc..). 
3) Wherever there is any techno-commercial development which may lead toward upgrading any nation to become more self-reliant and powerful, US interfered with the help of its powerful hand in the United Nation (It is strange that UN formatted to propagate peace and welfare has an army under the nomenclature “Peace keeping force”, a contradictory juxtaposition of words, as Peace and Force can never go together !!!! Obviously, USA is responsible for this !!!) 
4) As a result, inflation is back in US. This results in higher US consumer prices, combined with the stronger dollar, push Americans to buy more cheap foreign goods, increasing the trade deficit. 
5) The super-high trade deficit demands a lower dollar - but the dollar Is climbing, adding to the deficit. A stronger dollar decreases US export profits lowering corporations\' balance sheets, putting downward pressure on stocks. This creates more incentives for US companies to go offshore to produce at lower cost and so puts downward pressure on US wages, while consumer debt service costs rise due to higher interest rates. 
6) At the same time, a stronger dollar is a threat to the stock market. One don\'t even need to understand why ? The only thing one need to do is the fact that every time one gets a \"great\" economic news these days (like how many jobs the President has \"created\" last month, etc...) stocks take it on the nose. 
7) As to the reasons why, there are several: higher rates raise companies\' borrowing - and therefore operating - costs, decrease their export profits via a stronger dollar, and decrease consumption because they raise hocked-to-the-hilt consumers\' debt service costs, depressing disposable [or investable] income. 
8) Meanwhile, the dollar keeps climbing, perpetuating this vicious cycle. If the dollar keeps rising due to the kind of dollar-short squeeze, (as Rick Ackerman sees) then either the US housing or the stock bubble - or both – do burst. In addition US exporters will see profit margins shrink, causing them to downsize their operations, lay off workers, go offshore, etc. 
 
C) EURO 
 
The EURO is the official currency of the Euro-zone, which consists of the European states of Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia and Spain. It is the single currency for more than 317 million Europeans, including areas using currencies pegged to the Euro. The Euro affects more than 480 million people worldwide. 
 
The euro was introduced to world financial markets as an accounting currency in 1999 and launched as physical coins and banknotes in 2002. Initially US Dollar was a stronger currency than Euro. But after 2003, the Euro started surging forward the US dollar. The reasons are :- 
 
1) All the nations in this pool are leaders in their techno-commercial expertise. (Except France, Portugal and Spain who captured foreign lands and formed their colonies in the past). 
2) They are exporting and assisting nations to the developing and under developed world. 
3) They never sacrifice their internal budgeted finance to other nations, and do not get involved either in their commercial or war situations. 
 
Hence the Euro is leading over the US Dollar and it will continue to do so, because of their diametrically opposite foreign policy compared to that of US. 
 
D) BOTTOM LINE 
 
1) The Euro has a high \"gold-tolerance.\" The dollar doesn\'t. The euro has great actual worldwide demand even while traders bid up the dollar. The dollar experiences lower and lower worldwide demand whenever traders bid up the Euro. 
2) A low Forex (Foreign Exchange) value is good for the Euro because it allows the Euro to propagate itself across the world financial landscape, without any negative consequences to the Euro’s area of economies. 
3) A low Forex value is bad for the US Dollar because people simply see it as a reason to get out of the dollar. 
4) Euro just doesn\'t happen to carry any risk of being sold off in a panic when it gets too low - but the dollar has that risk. If the dollar falls too low, people are tempted to dump it left and right, just like it almost happened in January this year. 
5) It can therefore be said without reservation that the Euro\'s greatest strength is its temporary weakness and the US Dollar\'s greatest weakness is its (very temporary) strength. 
6. If USD has to regain its strength, the foreign policy and involvement of USA on other national politics at the cost of US exchequer should drastically change.. 
Please refer to “ A push to George (in ) Bush\" at http://www.drvsrs.com/sedsgo.htm 
 
DR.VSRS 
Book Store – http://ww.lulu.com/drvsrs 
Websitr - http://www.drvsrs.com 
R & D BASE - 
Research Papers in Economics (RePEc) and Ideas : http://ideas.repec.0rg/e/psu50.html 
Social Science Research Net work (SSRN) : http://www.ssrn.com/author=360079 
 
Author Info
 
Experience in the area of Economics and Management over 40 years in Industrial, Service and Economic development sectors. Socio-economic development oriented expertise (1982-86) with Commonwealth Fund for Technical Cooperation, London as a \"Data Processing Expert\". With Caribbean Development Bank, Barbados (UNDP,World bank set up) as a \"Cnsultant Adviser\". PLease see \"http://www.drvsrs.com/drvsrs.htm\" and \"http://www.drvsrs.com/publication.htm\". National & International awards. R & D Author at http://ideas.repec.org/e/psu50.html and http://www.ssrn.com/author=360079 
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