Changes in the European Euro Essay Example | Topics and Well Written Essays - 500 words

Changes in the European Euro - Essay Example The dollar advanced 0.2 percent on 11th February 2011 to 83.43 yen. The euro declined 0.1 percent to 113.06 yen. B. Identify two or more factors that might account for the changes in the value of the U.S. dollar with respect to the Euro. The US dollar rose as against most of the currencies as Hosni Mubarak, the president of Egypt stepped down and handed power to the military, stoking demand for the safety of U.S. assets. US dollar gained third week in line against euro. Euro was weak also due to the news of President of Germany’s central bank resigned. The US jobs data are unlikely to encourage the Federal Reserve to change its loose monetary policy, which would help buttress the dollar. There was not sign of increase in interest rate of the euro-zone nations by the ECB hence that took away the support of euro as against US dollar. Referring to ‘the economics of Foreign Exchange and the Balance of International trade’ chapter, the supply of dollars offered in exch ange for a foreign currency, such as the Euro, depends on the willingness of dollar holders to purchase Euro.