|The Too Strong Dollar?|
|Topic|| International Finance
|Key Words||Depreciation, Appreciation, Exchange Rate, Trade Deficit, Economic Growth|
After years of assuming that a strong dollar was good for the U.S. economy, many economists are calling for the Bush Administration to reexamine its policy. They argue that the current strength of the dollar is hurting exporters, causing unemployment and reduced profits in those firms. Foreign investors, they also argue, may lose confidence in the dollar and a mass retreat from the dollar may harm markets and our economy. The Bush Administration has stated that it has no plans to either directly intervene in the currency market or try to influence investors by making statements that it believes the value of the dollar to be too high.
As long as the U.S. economy was growing, complaints about lost export
sales were muted. Now that the economy has slowed, the loss of export
sales reduces profits and results in firms having to lay off workers.
With an economy tottering between slow growth and recession, added layoffs
could be the deciding factor. The National Association of Manufacturers
and the American Farm Bureau are likely to be putting pressure on the
Bush Administration to change its strong-dollar policy.
(Updated September 1, 2001)
|Source||Richard W. Stevenson, "More Experts Grow Wary As the Dollar Keeps Rising," The New York Times, July 31, 2001.|
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