In a post over a year ago, I observed that the relative stability of the dollar would come to an end as a confluence of events occurred. Those would be the end to rises in the US interest rates, and the continued increases in policy rates abroad, especially in the euro area and the UK, against a backdrop of a massive current account deficit that requires large and continuous infusions of saving from the rest of the world (and indeed consumes most of the world’s excess saving).
Category Archives: exchange rates
Maybe the Euro Isn’t the Competition
The 2006 Net International Investment Position
The BEA released the end-2006 net international investment position (NIIP) today.
Following yields up and down
Thinking about import prices, the dollar, and inflation
Some delayed reflections on the May import/export price release, and how to interpret the data in light of the empirics of exchange rate pass through.
Rejoice! The 2006 current account to GDP ratio has been revised up by 0.3 percentage points
There’s a temptation to view the upward revision to the current account balance, and the components thereof, as yet more evidence that the US external situation is in better shape than commonly perceived.
More on those rising interest rates
Rising rates look scary, but I still read it as good news.
Keeping China’s Yuan in Perspective
The Treasury released its report International Economic and Exchange Rate Policies yesterday. As expected, the Treasury declined to declare China a currency manipulator. On the same day, four senators submitted legislation to tie Treasury’s hands in terms of the actions it can take against countries with “misaligned” currencies.
Musings on Inflation Worries
The selloff in the stock market last week was attributed by some to inflation worries — namely that persistent inflation means a reduction in the Fed Funds rate is less likely than the market had until recently believed.
The April Trade Release: Good and Ambiguous News
The April trade release surprised on the upside. Here are a few other insights, not all of which are unalloyed positives.