The dollar in the doldrums...

With the dollar continuing to fall against the Euro and holding at 2 to 1 against the pound, there is a reasonable question as to whether the slide is nearing its end? Speculating on which way and to what degree the dollar will move is beyond my capability, but the current disparity between Purchasing Power Parity of the Euro and the actual exchange rate has been helping the current American accounts deficit. The Economist has an interesting article concerning this issue

Thanks in part to a weaker dollar, exports have helped prop up the ailing American economy. But the current-account deficit has not narrowed by as much as hoped. Figures released on June 17th revealed that it grew to $176.4 billion (5% of GDP) in the first quarter. Though down from a peak of 6.6% of GDP in late 2005, this is still a big shortfall. Strip out the surplus on investment income, and the underlying trade deficit is close to 6% of GDP.