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Weak dollar fallout

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BOB MOON: Down, down the dollar goes. Over the last couple of weeks the dollar has been sinking fast. What does that mean? Marketplace's Stacey Vanek-Smith takes a look.


STACEY VANEK-SMITH: The greenback isn't exactly in the pink of health these days.

Alex Beuzelin is a senior market analyst with Ruesch International. He says the cooling U.S. economy has many guessing the Federal Reserve will cut interest rates in coming months, so investors aren't as quick to buy dollars as they once were.

But, he says, don't expect policy-makers to take action to prop up the weakening currency.

ALEX BEUZELIN: The Bush Administration, of course, has been paying lip-service to the strong dollar, saying that it is in the country's interest that the dollar stay strong. But reading between the lines, it is quite clear the administration is amenable to an orderly dollar decline.

Beuzlin says that's because a lower dollar will help shrink the U.S. trade deficit. It makes American goods cheaper overseas.

But, he warns, a weak dollar could hurt the U.S. current accounts deficit.

Our economy relies on investors using greenbacks as a safe-haven. Anything that shakes their confidence in the dollar could spell trouble.

In New York, I'm Stacey Vanek-Smith for Marketplace.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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