The United States dollar, having regained some of the losses it suffered last month against major currencies, fell again in value of Friday (22 September).
The United States dollar, having regained some of the losses it suffered last month against major currencies, fell again in value of Friday (22 September). It is expected that the current weakness of the American dollar will be discussed next week in Washington at the annual meetings of the International Monetary Fund (IMF) and the World Bank.
SYNOPSIS: The United States dollar, being printed here in Washington, still remains, despite recent fluctuations in its value, the basic currency of world trade. And it is also vital as an international unit of value. Foreign central banks hold about two hundred billion worth of dollars out of total reserves of some three hundred and twenty billion. The recent crisis, and fall in the dollar's value, were blamed at first on speculation in world trading exchanges. But most economists, including White House officials, now seem to agree the core problem is the American economy, especially international inflation.
Recent attempts to combat inflation have had only partial success, and inflation in expected to run at about eight percent for the rest of the year. Although food prices have stabilised, the major cause of inflation now centres on consumer spending on services. President Carter's chief spokesman of inflation, Mr. Robert Strauss, says new proposals to combat rising prices should be ready by next month.
The fight against inflation has suffered through the Japanese Yen's rapid increase in value. Japanese imports, like these cars, provide almost ten percent of total U.S. imports each month. Although there have been public declarations of co-operation, some U.S. officials still believe the Japanese have taken few positive measures to reduce her massive trade surpluses all over the world. The Yen's strength has also led to foreign money managers investing in that currency rather than the dollar.
Imports are linked closely with President Carter's energy plans. He considers that, with control with control of inflation, these are the most important measures for reviving the dollar. Most of last year's trade deficit was blamed on oil imports, and the President predicts his programme will reduce reliance on overseas energy sources. He says the dollar could be strengthened if the legislation, notably the pending natural gas pricing bill, is finally approved.
The White House also theorises that monthly auctions of gold will support the dollar by taking up excess dollars in world markets, thus helping trade balance. President Carter sees no quick remedies, but he believes the dollar's fall does not truly reflect its worth.