Reply #21: Dollar up a bit in the last few weeks [View All]

[TomClash]

. . . which means profit-taking and they expect rates in the US to rise again.

Imports are more expensive, exports cheaper as the dollar declines. That is supposed to improve the current accounts deficit (which means we buy goods and services on credit because we don't exports enough to pay for them). Of course, exporters could just reap the profits by increasing prices and foreigners could decrease profits by not increasing prices and taking the currency loss.

You cannot sustain a current accounts deficit and low interest rates forever because eventually no one will invest in our debt unless they get a comparable rate of return. So that's one reason why interest rates are rising.