The United States devalued its dollar on Tuesday (13 February) by ten per cent in a bid to reverse crippling U.
The United States devalued its dollar on Tuesday (13 February) by ten per cent in a bid to reverse crippling U.S. losses in world trade.
Treasury Secretary George Shultz announced the second dollar devaluation in 14 months following wholesale selling of U.S. currency abroad by speculators alarmed by the gap between United States imports and exports. Mr Shultz said the devaluation decision had been taken in consultation with America's major trading partners.
Following the devaluation, there was a heavy demand for stocks as investors welcomed the economic gains likely to flow. A record number of shares was traded in the first two hours of business on U.S. exchanges.
Most American economists hailed the devaluation as a victory for the dollar which would help correct the country's trade and payments deficits. Among the major goods to be affected by the devaluation of the dollar will be high quality Japanese cameras, television sets, radios and tape recorders. Foreign cars will also be affected.
SYNOPSIS: United States Treasury Secretary George Schultz announced Monday night that the Government was devaluing the dollar by ten percent. Mr. Shultz said the devaluation was made in a bid to reverse crippling American losses in world trade.
There was a heavy demand for stocks on the money market and stock exchanges throughout the United States. Following the announcement in Chicago, stock sales soared and a record number of shares was traded in the first two hours.
Financiers viewed the devaluation as a significant step towards correcting the American trade imbalance with the rest of the world, particularly Japan. The devaluation raised the official price of gold by more than 4 dollars to 42 dollars.
In stores throughout the country, imported products will now be more expensive as a result of the devaluation. Japanese cameras, radios, television sets and tape recorders will be just some of the products hardest hit by the currency move.
Foreign cars make up a large percentage of the American automobile market. Japanese cars are popular, and importers had brought in huge stocks to offset the effect of devaluation. Importers say they are not worried because unionists are asking for wage increases. If union demands are achieved, Japanese cars will again be competitive with American vehicles.