I have often wondered about what would happen to the super-power status of the USA if other nations started trading oil in Euro instead of USD. Essentially, the countries can trade in whichever currency they mutually agree to but most of the international trade has been taking place in US Dollars. Oil, which dominates the global trade, is traded mostly in USD and has therefore contributed largely to the international supremacy of the currency.

It was reported by Bloomberg sometime in July 2009 that many countries had started questioning the stability of USD. The graphs below can justify their doubts.  USD’s exchange rate with some important currencies for past one year like Euro, British Pound, Japanese Yen and Chinese Yuan:

USD to Euro

USD to British Pound

USD to Japanese Yen

USD to Chinese Yuan

Note: The above graphs have not been clubbed as it may give a misleading impression.

We can see that other than GBP, the exchange rates with other currencies have been fluctuating significantly.

Getting back to the original question, can Euro replace US Dollar in International trade? What if it does?

I read that few countries like Russia, China and Japan are having some ‘secret’ meetings to agree that they will replace USD with a basket of few Asian currencies, and gold for oil trading. I am not sure if the article was based on authentic research. I seriously doubt it. My reasons for not believing the article are many. One is that the Asian countries like China and India are largely dependent on USA for their flourishing economy. For example the US trade with China over the past decade has been as illustrated by this graph below:

Chinese Trade with USA

Note- Import/Export data for 2009 is up to only July. Please don’t be misled!

We can see how much the imports from China exceed the exports to them. This can be seen in two ways-

1. USA’s dependence on China- mainly for its consumer goods.  It’s hard, if not impossible, for the manufacturing industry in USA to revive from the hard blow.  This would indicate the possible weakness of US Dollar.
2. China’s dependence on its exports to USA. This also means that China cannot risk its trade relationship with USA by supporting any other currency for oil trading. US is China’s largest importer.

Apart from the trading relationships, the developing countries also hold huge US Dollar currency reserves. If Dollar is replaced by any other currency, it would mean decrease in its value. This in turn would mean depletion in the value of their currency reserves and therefore decrease in their wealth. I am not sure what portion of these reserves, if any, is effectively hedged.  In addition, many international investors have put their money in the ‘toxic investments’ in USA. They would not want to lose whatever is left of them.

In a nutshell, if American Dollar is replaced – many nations- particularly developing ones- will be adversely affected. This shift may cause another global economic crisis- which may not be easy to survive.

A consumer group released a recent analysis of Federal Reserve date in February, 2009, indicating that among Americans, the typical household has net financial assets – including retirement savings – of less than $10,000. Financial assets included savings and investments but excluded equity in primary home and vehicles. Among low- and moderate-income households, the typical net financial assets were less than $1,000.

That’s not a lot of cushion folks and just surviving day to day is no way to live.

The America Saves campaign is a nationwide campaign comprised of a coalition of non profit, corporate, and government groups to help individuals and families begin to save their money and start building wealth.

It provides information, advice, and encourage for those who wish to:

-pay down debt

-build an emergency fund

-save for a home

-save for education

-save for retirement

… all of these are primary concerns for people, but many are concerned about how to get started.

Take a look at their website and take advantage of the many free services which include:

-brochures explaining ways to save and savings plan enrollment

-access to coaches who can assist you with setting goals and following a plan

-access to financial planners who can provide more detailed planning advice when you are ready

-no- to low-balance savings accounts and even CDs at local banks and credit unions

-information about buying U.S. Savings bonds and saving in money markets

-subscription to a quarterly newsletter

Strategic information provided at the America Saves site works hand-in-hand with budgeting. Finding money to save seems difficult until you set up your budget and start looking at your finances strategically.

Disclaimer: Overall management for the campaign is provided by the non profit Consumer Federation of America (CFA). CFA is a federation of some 300 consumer education, advocacy, and cooperative organizations dedicated to advancing the consumer interest.

The new site is here, and we are very proud of it, and we look forward to what everyone has to say about it.

Existing BudgetPulse users will notice that the log in information requested is different on the new site from the old site.  You will now be logging in with your email address and the password you created instead of with a user name.

A lot of users requested this change because it is easier to remember the log in details to an email address over a created user name.  If you forgot what email address you set up an account with, click on the “Forgot Login?” link here or on the site.  Then enter your user name and your email address will be shown.  You can also view the video below showing you how you can do this.  If you h ave any questions, please feel free to contact me at support@budgetpulse.com or on Twitter.

Click here to view the embedded video.

The brand new BudgetPulse personal budgeting software was released today.  Already we are hearing positive comments from all of you about the new release.   I spoke with a lot of users about something that the old tool lacked.  A lot of existing users to BudgetPulse brought up the point that they may have been confused about how to use certain parts or functionalities in the software, and we lacked a help section.  Newer users mentioned they were confused with where to start.

That all changes NOW!

We have released a full user guide, video guide, and have expanded our FAQ’s.  New users and current users may want to check out the How it Works video to see an overview of the new site.

Click here to view the embedded video.

If you have any questions once you get started using the tool, you may want to check out the user guide and video guide for help with specific actions.

User Guide

Video Guide

FAQ

Enjoy the videos and let me know what you think of hem, and if there are any other videos you would like me to make for you.

Feel free to contact me at support@budgetpulse.com or on Twitter.

I am happy to announce that the brand new BudgetPulse personal budgeting software was released today.  We have been working hard for months redesigning the entire site, and improving and adding functionality based off of all of your requests.  I want to personally thank all of you for your support, and without you guys, we wouldn’t have gotten here.

The site is visually enhanced, allows for easier navigation, features improved content, a video guide, and budgeting functionality.

Some of the areas we improved on or added…

• a) Advanced recurring options
• b) Advanced split options
• c) Brand new dashboard showing full financial overview
• d) Advanced search to locate transactions
• e) Tagging system to help organize transactions better
• f) Full user guide and video guide
• g) Upload Quicken, MS Money, or CSV files of financial information in minutes

We are pleased to bring you all of these features and more.  To get a quick overview of the new site, check out the “How it Works” video below.

Click here to view the embedded video.

I can’t wait to hear everyone’s reaction to the new site.  Feel free to contact me at support@budgetpulse.com or on Twitter if you have any questions.

Thanks again and enjoy!

Monday June 22nd 9PM EST – Tuesday June 23rd 1PM EST the site will be down for migration.

I am very excited for the new site to be released, and so should all of you.  We have completely revamped and improved the entire site based off of your recommendations.

If you have any questions about the migrations to the new site, pleases feel free to email me at support@budgetpulse.com or reach me on Twitter.

I hope everyone had a great weekend and those who celebrated Valentines Day had a nice Saturday with someone special.  BudgePulse made some headlines over the past week as well during the weekend that I wanted to share with you.

MSN - 6 Best Budgeting Sites

USA Weekend - Track Money Online

Oregon Live - How Online Money Management Sites Stack Up