Dollar overvalued, limits exports, says NAM
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Manufacturing News, Source : The Manufacturer US
Published : 05 May 2006 17:55
Despite a recent decline, data indicate the dollar remains nearly 10 percent overvalued and a significant cause of the increasing trade deficit according to the National Association of Manufacturers (NAM).
“The last time we had a normal value of the dollar was in January of 1997,” said NAM President John Engler. “During the period of run-up in the dollar from 1997-2002, many U.S. producers were priced out of world markets. Our exports declined precipitously as our imports continued to grow.”
The dollar has dropped 13 percent since its peak in February 2002. “A further decline in the dollar is not a negative sign for the U.S. economy. In fact, with a correctly valued dollar, we should see a pick-up in our exports, resulting in the growth of profits and jobs for U.S. producers,” said Engler.
“Since the dollar has been overvalued for almost a decade, merely bringing it back to equilibrium level with another 10 percent drop wouldn’t create a sharp enough dent in the trade balance – so the dollar would probably have to fall below that level for some period of time,” continued Engler.
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