Government Bailout Will Lower Dollar?s Value in Short Term: Economist

The U.S. government announced over the weekend plans to buy $700 billion in mortgage debt. While lenders are eagerly awaiting the opportunity to remove toxic debt from their books, what the bailout will mean to the value of the dollar and consumers’ ability to lend and pay down debt remains a mystery.

“The dollar is one of the most difficult variables to forecast,” Dan North, chief economist for leading trade credit insurer Euler Hermes ACI, told insideARM.  North said if the bailout inspires more confidence in the U.S economy and global markets, the value of the dollar could increase in the short term. However, the dollar’s value could fall if the market doesn’t understand how the bailout will work and what it means to consumers.