There are certain factors behind the present trends of the nosedive in the face value of the USD dollars in the international market which enhance the possibility of the credit crisis in America. A short analytical synopsis can be drawn to scoop out the exact scenario of the position of the credit rating and face value of American dollars in the international market.

The Federal Reserve i.e. the US central bank on 18th September decided to make the steady reduction of the interest rate of benchmark federal funds by a half percentage point that indicates the decline from 5.25. to 4.75 per cent. This type of initiative was taken to check  adverse impact on  American economy of a credit crisis . In early part of August first the credit crunch was felt after the repayment problems in the American sub-prime mortgage sector which provided backup to those borrowers who had poor credit history. This type of downfall boosted up widespread uncertainty and fear in the international market. For this particular reason there was the higher possibility of the American credit crisis in the financial sector. Again the lending sectors preferred to sell the sub-prime mortgages to the investment banking sectors, which had further packaged them into mortgaged backed securities and later these were sold to international investors.

These securities were combined with other sorts of debt and later sold as part o f collateralized debt obligations or CDOs which had impact on credit ratings that were much higher in comparison to those of the embedded debt. The ramification in July of huge losses by hedge funds which possessed sub-prime related CDOs invoked questions of CDO values. Therefore panic selling snowballed into the downfall of the CDO market with the result that the accessibility to the international credit by companies was acutely blocked.