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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Lee who wrote (3363)5/29/2002 11:08:20 AM
From: Robert Douglas  Read Replies (1) of 3536
 
Take a look at the fundamentals. The U.S. current account deficit means that about 1.3 billion dollars are on offer in the foreign exchange markets every day.

I'm of the opinion that the dollar will keep dropping until it reaches a level that puts a serious dent in those flows. It will be a long adjustment process, perhaps taking years. But when it's over, the dollar will be significantly lower than it is today.

This isn't the bad news that today's headlines make it. It's just the market's way of correcting a situation that was extremely imbalanced the last few years and hidden by speculative flows into the dollar. Now those speculative purchases are being pulled away and revealing an untenable level for the dollar.
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