While the dollar and US economy will continue to weaken because of the weakening housing market, rest-of-world currencies will grow stronger. And while some other countries may follow the US rate reduction (like Europe), Japan has a very low interest rate right now, and only has room to go up.
Japan dropped their gov't rates down in the '90s surprisingly similar to the way Greenspan drove down the rate from Jan '01 - June '04, driving up home prices, and resulting in a catastrophic Japanese market crash. Now the Japanese yen has nowhere to go but up while other currencies still have lots of room to push their key government rates down.
On the similarities in Japan's boom and bust in the 90's...
http://articles.moneycentral.msn.com/Investing/JubaksJournal/...
The rate drops from Jan '01 - June '04 by Fed Chairman Greenspan under the guidance of President Bush...
http://www.bankrate.com/brm/news/fed/20010627e.asp
$92.75 (02/17/08)
