Last month’s G7 finance ministers’ meeting in Dubai prompted a sharp fall in the dollar. I reckon this is a turning point in the fortunes of the currency since its peak in February 2002.
To get the US economy going, the administration has already incurred huge deficits and started issuing limitless, costless dough. Now it has ditched the “strong dollar” policy.
The consensus view is that this is good news. A weaker dollar, this argument goes, will help reduce the huge US trade deficit, and Europe and Japan will be forced into economic reform to revive their economies.
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