the latest figures brought to us the fact that the number of bank failures in the US has reached 123.
The financial crisis had indeed hit hard on all aspects of the economy.
A bank failure is not something to be taken lightly as it suggests weakness in the economy.
Possible reasons of why a bank may fail includes
- Default of loans by customers
- A lack of folks seeking funds for any new businesses
- Drop in savings balances along customers
- Commercial customers default
All four examples stated above are crucial factors of the health of the economy and hence serves as a clue that there remains fragile aspects of the market.
Furthermore, these problems hit home directly with the consumers and we all know that consumers are the heart of the economy
As long as these sentiments are bad, we may expect weakening pressure on the currency. A prudent investor will probably factor in the condition of the economy and consumers before making a decision. Less investments may means less demand for the US Dollar to do business.