313 comments on DrumBeat: March 12, 2008
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313 comments on DrumBeat: March 12, 2008
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On the other end, EADS will pay contractors in dollars:
http://www.ft.com/cms/s/0/14507ae6-ef44-11dc-8a17-0000779fd2ac.html
This ties a lot of European companies to the dollar. Wonder if that was thought about in awarding the contract? Nah.
Sending dollars out of the country weakens the dollar. And the scale is so small as to be meaningless. The top end figure that I have heard over the life of the contract is $100bn, much of which would stay in the US. Finally, this doesn't tie European companies to the dollar in any way. They are certain to hedge and can just convert to what every currency they want when they receive the fund (and can lock in the rate now, the $-Euro market is very deep).
I don't think there is any currency implication in this at all other than that companies that get paid in any given currency will seek to take in debt or expenses in that currency. However, you could make an argument that EADS pursuing dollar denominated contracts shows confidence in the dollar.