[lbo-talk] DD on the USD

Doug Henwood dhenwood at panix.com
Wed May 21 09:51:23 PDT 2003


X-Sent: 21 May 2003 06:03:12 GMT To: dhenwood at panix.com From: dsquared at danieldavies.com Subject: The mighty dollar X-Sent-From: dsquared at danieldavies.com Date: Tue, 20 May 2003 23:03:11 -0700 (PDT)

I am in email hell at the moment, which is why I haven't managed to switch my lbo-talk address over to the new system. But I'm keepng track of things via the archive and I couldn't resist chipping in my two cent's worth (EUR0.017 and falling). I don't suppose I could prevail on your good nature to forward this short comment, please? cheers dd

Seth wrote:


>>The thing I don't get about the dollar's drop against
the euro is how it's supposed to do much about the trade deficit, when something like three quarters of the deficit is with five or so East Asian countries -- most of whose currencies so far haven't risen very much (and China's hasn't changed at all, of course). Europe doesn't account for much of our trade deficit. Yet most of the dollar's slide has happened there. The only thing I can think of is that it could pressure the ECB to cut interest rates. <<

The capital flows which finance the deficit, rather than the deficit itself, are the key to the currency move, and they come from euroland and Japan in the main (we Brits put up quite a bit but have never managed to escape being a dollar proxy in the past).

dd



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