Assignment (Economics) Example | Topics and Well Written Essays - 250 words - 6

(Economics) - Assignment Example Also the mortgage fallout over the real estate crash, has skewered the flow of FDI in the US, though recent acquisitions of American firms by overseas companies does indicate some level of foreign investment. But it is also the rise in popularity of a strong Euro amongst global banking giants, that the has resulted in fall of demand for the dollar . In economic terms, it is simply a case of the supply of dollars outstripping the demand for it, thereby decreasing its value. The fallout of this within the US is the rise in prices of commodities like oil and gasoline, and a lower purchasing power. Traditionally, price of gold is inversely related to the value of the US dollar, and on 20th April 2011, gold prices breached $1,500 for an ounce for the first time due the week dollar. Mexico, China, India, Russia have made large additions to their gold reserves recently, which reiterates the fact that emerging economies are diversifying from their dollar dominated assets to lower their risks. China with a forex kitty of a staggering $3.05 trillion said ".. we are pushing forward with a strategy of diversifying our investments of foreign reserves." The Turkish lira- the worlds least valuable currency which after years of severe inflation and devaluations traded at 1.65 million per US $ till 2004 was phased out, when the new Turkish Lira- which trades at averagely 1.5 to the US dollar- was introduced on January 1st