T the dollar depreciation against the euro and pound would never address the global current account imbalances

Moreover, the dollar depreciation against the euro and pound would never address the global current account imbalances. If we look at the US deficits, to a large extent it reflects the surpluses of Asian economies. Interestingly, there hasn’t been any marked depreciation of dollar against the major Asian currencies. Rather, major Asian currencies like the yen and the yuan have actually depreciated by 0.8% and 2.9% respectively, against the dollar during the same period (Jan 03, 2006 – Dec 01, 2006). So, till the time dollar doesn’t depreciate against the Asian currencies, hoping the imbalances to improve is actually being too optimistic.

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Source:- IIPM Editorial

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