Re: Dollar Digs Record Low Vs Euro

OS,

The counterbalance to that is that, since much of our debt is bought by
foreign countries, they will slow in buying US debt (why buy debt
denominated in a weak and devaluing currency?).

Since we cannot finance our entire debt internally, Treasury will have to
offer higer rates of return to attract buyers, and that will correct some of
the the imbalance, and eventually slow the US economy.

Since all the strong U.S. economic data has failed to offer the dollar any
sustained relief in its slide, there are global concerns that rebounding
domestic demand will only encourage Americans to suck in more imports. This
will exacerbate our huge current-account gap, currently running at five
percent of GDP.

The contention that a lower dollar will help our goods overseas fails to
recognize that we import far more than we export, and strengthening demand
will affect imports more than a weak dollar will affect exports, thereby
worsening the already excessive current-account deficit.

That said, however, I don't expect much further deterioration in the dollar
unless our economy continues to hemmorage (as in gush) red ink. If that
happens, all bets are off.

Allan

"Old Salt card carrying Curmudgeon" <[EMAIL PROTECTED]> wrote in
message news:[EMAIL PROTECTED]
> Dollar Digs Record Low Vs Euro
> 17 minutes ago
>
> LONDON Dec 3 (Reuters) - The dollar fell to a fresh record low on
> the euro on Wednesday for the fourth session in a row, in the
> grip of a downtrend fueled by U.S. current account deficit,
> geopolitical and trade concerns.
>
> Full story at:
>
http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=1&u=/nm/20031203/bs_nm/markets_forex_dc
>
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