about the exchange rate

Discussion in 'Economics' started by hermit_trader, Nov 26, 2003.

  1. If the currency of a country is strong, would it be a disadvantage or advantage? Many people feel it is the former. Why do they always ignore the advantages?
  2. rodden


    Mixed bag. It's a trade disadvantage and a disadvantage re. debt held by foreigners, but an advantage re. attracting foreign investment $$.

    I assume you're talking about the U.S.$ which at this time the U.S. wants to passively devalue in order to 'normalize' a massive trade imbalance and a critical debt situation. The strength of the USD is of enormous importance to the economy; Greenspan et al are walking a tightrope trying to manage the Dollar's descent in an orderly fashion to a level more compatible with the nation's needs. They may or may not maintain control; the Fed has many resources and will probably succeed.

    Meantime, we have no way of knowing where the target range for the USD is, and the Fed isn't going to tell us.