- The Washington Times - Sunday, July 14, 2002

Front-page coverage of the dollar's recent change in global currency markets glossed over the benefits of the trend and almost completely ignored its root causes (“Decline of the dollar takes toll on investors,” July 1).

As President Bush made clear at the G8 meeting in Canada, “The dollar will seek its level based upon market forces and based on whether or not our country can rein in spending, can recover and can revitalize our manufacturing base.”

This is exactly what America's business and labor leaders have been seeking an end to the previous “strong” dollar policy that put an artificial floor under the currency and kept it from reaching a level justified by economic fundamentals. It is particularly significant that the president singled out the revitalization of the U.S. manufacturing base as a priority, as our exporters have suffered disproportionate (and massive) losses of sales and jobs directly because of a global playing field that has been tilted in currency exchange.

Though some appreciation was understandable after the Asian financial crisis of 1997, the dollar continued to rise long after the crisis had abated. This trend continued after even economic fundamentals such as U.S. economic growth, foreign investment inflows, stock-market appreciation, interest rates and the trade deficit all indicated the dollar should have returned to more normal levels.

Clearly, a correction is long overdue, and there's no better setting than the current economic climate of low inflation, low interest rates and less-than-full employment. Instead of fretting, we should be thankful that the change has been orderly and gradual and that the net effect will be increased exports and economic growth and not a crash of any kind.



National Association of Manufacturers


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