May 25, 2003
$
The value of U.S. dollar keeps dropping and although some suggest this is by design and is to spur exports, I wonder if this has in a small way contributed to the situation.
Posted by Pedram at May 25, 2003 11:14 PMI've watched a number of news analysis programs about this issue. Snow has not abandoned the strong dollar policy, but the Treasury does not see a need to step in at this point to shore it up. Short term deflation helps our exports, and as long as the deflation doesn't continue at a problematic rate, a slightly weakened dollar shouldn't alarm anyone. Soros is going to do whatever earns him money, and at the first sign of a declining Euro and strengthening dollar, you can bet he'll sell his Canadian and European currency and buy dollars again. I read an article on Instapundit yesterday about the worries in Germany regarding the gains in the Euro against the dollar: Germans aren't buying anything and German export sales in the US are dropping--not good for Germany in the long term any more than steady deflation will be good for the dollar. But if this situation is perceived to be leading to a worldwide recession, then both the US Treasury and the EU will adjust interest rates to stabilize both currencies. I don't think the dollar's weakening is a result of US market manipulation, but rather the result of other market realities, especially the growth in value of the Euro. Global markets.
Posted by: Moira at May 26, 2003 08:04 AM