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Another Day Another Falling Dollar.
(From Business and Finance)
How much further will the dollar fall?
Or has it already fallen so far that it will now start to move back to a higher level?
For travellers to the United States from Europe or Asia, US prices are dramatically lower than at home. A hotel room or dinner in New York seems a bargain when compared to prices in London, Paris or Tokyo. And shoppers from abroad are loading up on a wide range of products before heading home.
But, despite this very tangible evidence, it would be wrong to conclude that US goods are now so cheap at the existing exchange rate that the dollar must rise from its current level. Although the goods and services that travellers buy may cost less in the US than abroad, the overall price of American products is still too high to erase the enormous trade imbalance between the US and the rest of the world.
To be sure, the falling dollar over the past few years has made American products more competitive and has caused the real value of US exports to rise sharply - by more than 25% over the past three years. But the trade deficit in 2007 nevertheless remained at more than $700bn, or 5% of gross domestic product (GDP).
The large trade deficit and equally large current account deficit (which includes net investment income) implies that foreign investors must add $700bn of US securities to their portfolios. It is their unwillingness to do so at the existing exchange rate that causes the dollar to fall relative to other currencies. In falling, the dollar lowers the value of dollar securities in foreign portfolios when valued in euro or other home currencies, shrinking the share of dollars in investors' portfolios.
- Testing time for Jim Baker. (dollar and trade-deficit policies)
- Magazine article from: U.S. News & World Report Mervosh, Edward January 19, 1987 700+ words
...the U.S. trade deficit through a weaker dollar, which has...decline in the dollar against they...mark. But the trade deficit still widened...against the dollar. Along with...predicting that the trade deficit would start...
- Trade Deficit Soars to $16.5 Billion;Record Shortfall In July Blamed Partly on...
- Newspaper article from: The Washington Post Anne Swardson September 12, 1987 700+ words
...15.7 billion trade deficit in June of this...1986, the annual trade deficit was a record $156...recent fall in the dollar's value was partly...increase in the trade deficit, which is expressed in dollars. "The president...
- DOLLAR RALLY HIDES REAL DANGERS, FIND STUDIES / IF DOLLAR HOLDS AT PRESENT...
- Newspaper article from: The Journal Record JONATHAN FUERBRINGER, NY TIMES July 20, 1988 700+ words
...dollar must fall rather than climb to assure that the trade deficit continues to narrow. The level of the dollar has a key influence on the trade deficit. Even a small increase in the dollar can change the outlook, a factor that has gotten little...
- NARROW $12.1 BILLION TRADE DEFICIT SET BY FALLING OIL PRICES, DOLLAR
- Newspaper article from: The Journal Record TOM RAUM, AP May 31, 1986 700+ words
...declining U.S. dollar helped narrow the nation's trade deficit to $12.1 billion...figures. A weaker dollar makes imports more...It was the lowest dollar amount spent on...The U.S. trade deficit with Japan remained...
- THE DOLLAR AND A HIGH TRADE DEFICIT
- Newspaper article from: The Boston Globe Charles Stein, Globe Staff January 16, 1987 700+ words
...hope is that a weaker dollar will bring down the trade deficit enough to keep the...s fear about the trade deficit. Despite a sharp drop in the dollar already, and a pledge...American goods, the trade deficit has melted as slowly...
- Trade Deficit Hits $17 Billion In October; Dollar, Stocks Fall
- Newspaper article from: The Washington Post Stuart Auerbach December 11, 1987 700+ words
...had counted on to lower the trade deficit. The dollar has fallen about 50 percent...The continued decline in the dollar is bound to worsen the trade deficit, leading to further declines in the dollar." But a lower dollar causes...
- U.S. MUST BECOME POORER TO REDUCE TRADE DEFICIT / STOCK, DOLLAR DECLINES ASSERT...
- Newspaper article from: The Journal Record LEONARD SILK December 12, 1987 700+ words
...take a few dollars. October...biggest monthly trade deficit on record...knocked the dollar down to a...while the dollar was falling, the trade deficit had widened...plunges in the dollar. ``To...thereby our trade deficit, we are...
- TRADE DEFICIT FALLS, TOUCHING OFF RALLY DOW UP 61; DOLLAR CLIMBS.(Main)
- Newspaper article from: Albany Times Union (Albany, NY) November 13, 1987 700+ words
...half years after the dollar peaked, we are finally...in the value of the dollar because oil is sold in international markets for dollars. But imports of manufactured...which are sensitive to dollar fluctuations, fell...months of 1987, the trade deficit was still amassing at...
