WASHINGTON -- We hear about record breaking declines in the value of the dollar, rising U.S. trade deficits and a retrenchment of inward investment flows. Cassandra-like voices point to the war-caused budget deficit, foresee a growing U.S. dependence on the mercy of foreigners and predict the imminent collapse of the global economy.
Although these advocates of negativism are sadly mistaken, it is appropriate to review the key effects of dollar-value changes together with an outlook of likely developments in 2004.
Many numbers are bandied about when it comes to the decline of the dollar. Most frequently cited is dollar depreciation against the euro with claimed declines between 17 and 40 percent, depending on the timing of the crest and trough measurements.