Why is the dollar appreciating?

My knowledge of economics tells me that if the government borrows money, either from taxpayers or from external funds, two things should happen:

1. The currency should depreciate.
2. The credit rating of the government securities should worsen.

Why is neither happening? I think Shyamal Roy was wrong.

Comments

Nothing Spectacular said…
in my humble opinion - i think the things you mention should happen in a rational market. currently we are seeing panic, and there is no creditworthy name left anymore - not marquee banks, not corporates, not even hugely powerful governments. in this scenario, there will be a flight of capital to any safe haven, and unfortunately right now the only 'safe' place is US treasuries
October 8, 2008 at 7:31 AM
bluesky said…
Its a flight to safety all around. Dollar is reaffirming its status as the reserve currency of the world. Gold is rallying. I know people who are opening bank accounts in SBI.
October 9, 2008 at 11:36 PM
Monsieur K said…
are you still pondering over this Q?
u havent written a word since October. been busy, eh?
February 9, 2009 at 2:07 AM
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