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The US dollar was the big story in 2007 — if you were selling it. Compared to 2001, the value of the dollar has gone down by 40 percent against the euro. And values at the beginning compared to the ending of 2007 were significantly down: the dollar was down about 13 percent versus the euro, 10 percent versus the yen, and 8.5 percent versus the pound sterling. Its value was at such a record low that supermodels and popular rappers made public their preference for getting paid in Euro, no dollars, please. The US dollar did stop skidding towards the end of 2007, but the question now becomes: has the dollar bottomed out or will the slide continue in 2008?

Why the Dollar Weakened in 2007

The dollar seemed so weak in 2007 because the rest of the global economy continued to grow even as US growth stalled, due in part to steady demand from the Middle East, China and India markets. Countries acted more independently, as illustrated by the Australian central bank’s decision to increase rates to stave off inflation at precisely the time the US Federal Reserve was cutting interest rates. Before December in fact, interest rate cuts happened only in the US. In short, some sort of decoupling occurred in the global economy, and this was a key factor to the strengthening of the other currencies and the weakening of the US dollar.

There are signs, as we begin 2008, that the phenomenon will no longer obtain this year and the global economy will again move more closely in step. In the latter half of 2007, economic growth in the UK and Canada slowed down indicating that the two countries were being weighed down by the weak US economy. In addition, the shock waves of the US subprime mortgage crisis have also shaken the financial markets of many countries, particularly the UK, where growth in the past years has depended on housing, mortgages, and the public sector. There are also signs of strain in the Eurozone, notwithstanding the ECB’s hawkish position on monetary policy. The pressure to reduce rates will increase if growth continues to weaken further in the US or in other countries. The pressure already forced the UK Bank of England to cut rates in December and more cuts are forecast for 2008.

Interest rate cuts will be the thing to watch in the currency market. The US Fed has already lowered interest rates 100bp in 2006 and another reduction will be more in line with expectations; but if the Eurozone begins to lower rates, this would be a significant departure from current policy, which could signal a major change in the outlook for the euro.

Where US Economy Is Going

The big question is whether or not the US economy is going into a recession, which would seriously impact global growth. Majority of the American public thinks the economy is already in recession, according to polls released in December. Public perceptions notwithstanding, economists think otherwise. A Business Week survey on 54 economists in December showed that the group believes the country will reflect a 2.1 percent growth by the end of 2008 (it registered 2.6 percent growth in 2007). They believe that although the first half of 2008 will be difficult, consumer spending will not stop, albeit more restrained. Fundamentally, the forecast of no recession rests on the assumption that the Federal Reserve will continue its round of rate cuts. Although financial losses in the subprime sector will continue, consumer confidence will depend largely on the Federal Reserves actions to support economic recovery.

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While there are many new technological advancements being made in the world of science, Internet has been one technology that is vast outgrown its initial boundaries.Perhaps one of the most important aspects of this leap in the tech world is ecommerce.

This allows buyers and suppliers all over the world to communicate business terms and make easy and safe transactions from one account to the other with a simple click.In layman terms, with the possibilities of linking the bank accounts with Internet saving accounts, it has become very easy for people to do business with others around the globe, thus expanding their business by erasing the limitation of geographical boundaries.

Benefits of Internet Savings Accounts

-Not only do a vast majority of the banks provide the option of an Internet Savings account, but also, these bank accounts can be accessed from any part of the world at any time.This means that you can check your savings, the status of your account and more from the comfort or your home 24 hours a day, 7 days a week.

-Saving money for a rainy day was never easier before internet savings accounts.In just a minute or two you can transfer as many savings from your current account to the savings one so that you have funds set aside when you need them for college, a vacation or for any other purpose.

-This also improves the usability, since the person does not need to drive to the bank in person or stand in the queues to get the transactions done. Just accessing the account with a computer and an internet connection would suffice to check and make the required transactions.

-Another great benefit that comes with internet savings accounts is the interest rate.Online banking options often offer higher interest rates than offline ones and this aspect of their policy should be looked in to carefully before you make an account with them.

As is the case with pursuing any task of importance the best way to get the best deal is to conduct an extensive comparative survey on the internet that will tell you which banks offer what policies.Again, there are a variety of websites, which provide you with the quotes of the different services once you fill their forms that provide the details they require.

The quotes will do the comparing for you and tell you whether your bank of interest is giving you the best available or not.Most of these websites are simple in their navigation and have their information sorted under tabs so that you can find exactly what you are looking for without any problem at all.

Considerations

While for most people the pros of internet savings will definitely outweigh the cons, many others will have some security and safety concerns.And while it is pretty difficult for hackers to hack into your online savings accounts by cracking your account numbers and passwords, it is not completely impossible.This is a concern especially for those who have registered a long term savings account.

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