Tuesday, 16 November 2004

Euro near all-time high as US reiterates "strong dollar"

The US dollar continues to support the "strong dollar", Treasury Secretary John Snow told reporters in Dublin yesterday. So what is he doing about it, other than talking about it?

Nothing. Not just because there is not much he can do about it, but because he probably doesn't really support a strong dollar. With the US suffering large and growing trade deficits and having difficulty creating jobs, a strong dollar is not necessarily in the best interests of the US economy.

Last week, the euro rose to an all-time high of US$1.30. It is still hovering around that level. If the US dollar is strong, the euro must be Herculean.

I look at some of the factors surrounding the US dollar's recent decline -- in particular, the trade deficit -- in "US dollar affected by both trade deficit and inflation".

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