U.S. dollar value vs. overseas currency

The true value of the Dollar is measured against gold.  Gold doesn't change value.  When you see the price of gold going up that means that the value of the dollar is going down.  Inflation is what makes the Dollar worth more or less.  Every time the Federal Reserve (which is a private bank, BTW) creates Dollars, like these trillion dollar stimulus plans and bailout plans, for example, the number of Dollars in circulation increases and the value of each individual Dollar decreases.  The Fed is essentially counterfeiting US currency making it worth less each time.  They can do this because the US Dollar is no longer backed by gold and silver.

Another problem with inflation (legal counterfeiting) is that foreign holders of Dollars see that the Fed is printing more money and making their Dollar holdings worth less (Economists estimate that there's about 5 trillion US Dollars in foreign banks).  So those holders of Dollars attempt to get rid of those Dollar reserves in their countries by buying gold, real estate, oil, etc.  When they do, those Dollars now flood the "market" in addition to the inflated Dollars that the Fed created.  Now the value of the Dollar drops even further.

When the Yen becomes more valuable than the Dollar that means that the Japanese politicians are tightening their money supply and the US politicians are loosening it.  In other words they are not counterfeiting their Yens as fast as the US Government is their counterfeiting Dollar (all governments do it).

Why does the government do this you ask?  The government only has three sources of income:

1. Taking it from you through taxes.
2. Borrowing it.
3. Counterfeiting it (inflating it)

Well, they can only tax you so much before you snap and they can only borrow so much before their credit rating sinks into an abyss.  But they can unwisely print up as much as they see fit.  No government entity makes money or comes in under budget  (the US Postal Service and Amtrak each lose over a billion dollars a year).  But the politicians have to pay for all the stuff they promised you while they were running for office.

My advise: if there is something you want to buy that may be on the edge of you price range you should probably get it now.  The current Administration and Congress are on an inflation frenzy.  Prices are only going to go up.

Eric I wouldn't worry about it too much.  I used to be one of the guys responsible for that news blurb. Dollor Higher...Dollarr lower...  I was a currency trader in a former life.  And It was French Francs for me at he time.

What there are talking about is the spot value.  Those are transaction that steeled in 2 business days.  What was said above is correct about what a strong or weak dollar means. 

At a retailer it should not fluctuate that much or be as sensitive to market movements as they are already taking a wide enough margin that the USD/JPY rate can move around some with it affecting the exchange rate you will get form a Japanese retailer.  Don't forget they have to convert the USD you just gave into their domestic currency.  And trust me... they're doing that at a profit too.

XE.com is the easiest way to monitor current exhange rates. http://www.xe.com/  Yes, it changes daily. HLJ also recently had to restructure it's prices to combat the higher yen exchange rate. Since 2007, the Japanese yen has risen over 40% in value against both the US dollar and Euro. Check the 1 year view on XE's chart. http://www.xe.com/currencycharts/?from=USD&to=JPY If you've monitored prices over the last several months, you've definitely seen them go up nearly each week ! About the only thing you can do is to try and combine items into a single order, and watch for any special sales.   

Me thinks everyone might be right; that it's not worth watching the values on a day to day basis.  Unless something drastic and horrific happens, I guess the $105 1/72 B-52 from Hobby Link Japan won't drop down to $20 overnight.  Drat!

Eric

I'll add my 2 cents for what it's worth. I used to buy a lot of model railroad stuff both domestically and internationally. What I found was that the most immediate effect was found when I ordered a lot of stuff overseas and paid by credit card. When the dollar was strong, I got a lot more for my money, even accounting for transaction fees and the less advantageous exchange rate offered by the cc company. In addition, many overseas online vendors have the ability to accept payments in US dollars, but their exchange rates often are not current or advantageous. Further, with many products you may save quite a bit if you make sure that VAT (in Europe-don't know about Asia)is not charged to your order.

Even though the dollar has strengthened a bit in the last few years, it is still pretty weak, so ordering overseas is less of a bargain. And last, unless your order is in the hundreds of dollars, it is probably not worth the time and hassle of trying to play the exchange rate game.

Regards,

Stenscience

I don't know if the effect is immediate - like stocks - or if it gets locked in at the close of trading - like mutual funds. But the effect of a day's trading is usually minimal. 

You might see a big difference ordering in February and then ordering again in November, but unless your ordering millions or billions of dollars, there's probably not much benefit in worrying about the day-to-day exchange rate.

That's exactly what I was trying to get at, HK.  Is the effect immediate?  Can I track how the dollar is performing against the yen and then, when it's strong, say "I must order now!"?  Or does the effect take place at the end of the day?  End of the week?  Is it an exercise in futility?  Etc...

I wonder if my credit card company would tell me since they'd be the one computing the currency exchange rate.

Eric

Thanks,pntsfr. That much is easy to understand. But can you tell us, is it wise to watch the exchange rate to determine which times would be better to order over seas products? Of is that an excersise in futility? Or does the excange rate not ahve an imediate effect on what we may be charged for products over seas.

If the dollar rises against the yen that means a dollar buys more yen than it did yesterday.

That means a stronger dollar buys more foreign products than a weaker one. Without getting political, that is a big reason why we have long had a "strong dollar" fiscal policy. However, a weaker dollar encourages other countries to buy US products which can be good for business. I'll cut this off now before it gets long and confusing.

Good question and one that I've pondered more than once, especially last year when I ordered the entire line of White Ensign IJA colors.
Maybe some currency savy folks will come along soon with an answer.