Stock Attack II - A Complete Analysis Message Board

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Strategies & Market Trends : Stock Attack II - A Complete Analysis

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To: Haim R. Branisteanu who wrote (44459)	5/1/2003 5:50:20 PM
From: ken-l	Read Replies (1) of 52237

haim, i respectfully disagree. the lower dollar helps in the long run; however, in short run, the j-curve effect plays a major role. since many foreign contracts are long in duration, it is nearly impossible for US manufacturer to immediately take advantage of the newly created competitiveness. the current account will actually worsen for a time period while the country continue buying the previously unfinished contracts for imports, but now at a higher price due to the devaluation. furthermore, the weaker dollar also causes the outflow of the debt and equity investments funds, in turn reducing the current capital account. wouldnt surprise me to see the official reserve being pumped higher soon. regards, ken

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