Monday, November 3, 2008

Deleveraging Continues to Push U.S. Dollar Upward

As major funds continue to deleverage in order to access cash, the U.S. dollar continues to be a major beneficiary, as the greenback continues to strengthen against major currencies.

Deleveraging means when funds and investors have to sell, they are buying back the U.S. dollar the had previously sold. That drives up the value of the dollar.

With no way of knowing how long companies, investors and funds will have to do this, the length of the time the U.S. dollar will remain strong will also remain unknown.

The U.S. dollar rose against the euro, British pound and yen during the trading session.

Within the dollar index (DXY), it increased to 86.35, a gain of 1.3 percent from the 85.834 close on Friday. The dollar index measures the U.S. dollar against six currencies.

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