If the US dollar could increase compared to the ASEAN Index then the national currency would be the increase relative to that of China. It seems that the Asian economic giant continues to generate a negative rate of exchange value for the United States dollar. This means that the US dollar could plunge compared to the ASEAN Index if what happens in the near future.
We are talking about the Asian tigers in this case, so you may wonder why the international stock markets are doing so well. This is because most developing countries have large economies and are using these in order to keep their currency strong enough to buy goods from other nations. In fact, the US dollar doesn’t matter that much more.
Now, the question we ask ourselves is: Is this problem or situation going to last? We have to ask ourselves why the way it is now could see it lasting for years to come. For ASEAN to talk about forex being a safe haven, it is actually on a downtrend right now. It has a reasonable range of support and resistance level that is quite small.
As this trend reverses and if it does, then the ASEAN Index could drop significantly. The average appreciation rate of the dollar against the ASEAN index is plus or minus 3%. And if we add a little basic arithmetic to the ASEAN Index exchange rate trend, we’ll get some rough estimate of the dollar’s current position.
If the ASEAN index is recovering from the global recession and shows no sign of recovery, then the world currency would certainly win against the US dollar, which does not go as far as it is now. So that nobody believes that the ASEAN Index will continue to fall, it simply will not happen.
All we can say is that the economic problems in the Asia Pacific countries are so bad that they could keep the ASEAN index down for years to come. But at the same time, the current economic stability of the US dollar is showing that this happens only for short periods of time.
Even if the ASEAN Index continues to rally, it is highly unlikely that the dollar will suddenly begin to drop below 70.00. That would be an extremely dangerous scenario and that is why we suggest that the US economy will remain weak for a long time.
Since we know that the ASEAN index will never recover to its previous level, then the only thing the rise in the US dollar can do is if the index begins to collapse. All we can say is that this could happen at any time and that it could be a great advantage to the American economy.
If the economy in Asia Pacific countries like Singapore, Thailand, Malaysia and the Philippines can regain its lost strength and develop a competitive economy, then the US will not be a serious competitor in Asia any more. Therefore, it is critical that the US dollar is allowed to float around the midpoint between where it is now and what it was to be in the long term.
For it to move back to where it was originally, the dollar has to be above the previous low of 70.00. If the Forex Index is still in a negative trend, then it is imperative that the stable stays in dollars or else the US dollar could increase more than if it were already in a positive trend.
The ASEAN Index is still in a negative trend. Therefore, if the ASEAN Index continues to maintain its current position for a long period of time, then we can be sure that the US economy will not recover in the short term.
The same is true for the euro, the Canadian dollar and the yen. If we think about it, it is going to be a very precarious situation for the United States dollar and we are lucky if it has not already been taken.