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The Currency Roller Coaster |
| Section: CURRENT ISSUES / ECONOMIC WATCH |
| Author: Rita McDermott Mayer |
| Publication: The world & I online |
| Issue Date: 6/1/1995 |
| Size: 993 Words, 6,273 Characters |
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In early April, for example, the U.S. dollar plummeted to its lowest value since the establishment of modern foreign-exchange rates in the 1940s. In December, the Mexican peso went into free-fall and leveled out at half its value before the plunge. Canada, whose dollar is weaker than the U.S. greenback, is struggling to shore up its value.
And on the other end of the spectrum, Japan and Germany, which today have the strongest currencies in the world, face the probability that the strength of their monies could slow the growth of their economies, which both are highly dependent on exports.
What is causing this volatile situation? To understand, one must first look at the exchange-rate systems. Basically, there are three such systems: a fixed rate, a floating rate, and ...
. . .
...g to Dominguez. "They're not concerned about the dollar right now," she says. "If anything, it's good for the dollar to go down, because that means our goods are less expensive on the world market.
"The reason they're trying to shore up the dollar is they're concerned about a free-fall. That brings extra volatility, increases uncertainty, and makes people nervous about making investments."
(796 of 6,273 characters)
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