GUATEMALA -- Since mid-March, the dollar's value measured by a trade-weighted index against a basket of currencies has declined by 6 percent and by 9.6 percent for the entire year. Some economists, businessmen and politicians in America believe that a weaker dollar will be "good" for the U.S. economy.
They apparently believe that a depreciating dollar will boost exports of manufacturing production while increasing employment and creating economic growth. And so it is that central bankers and finance ministers in Japan and China have been accused of playing games that hinder the exchange rate of their currencies from appreciating against the dollar.
Careful thought issue suggests that the arguments used in these harangues are based more upon political expediencies rather than sound economic logic. The most obvious evidence of this is that the balance of trade is not the best measure of the overall welfare of a country.