IMF says dollar ‘overvalued’

[Herman Munster]

http://www.ft.com/cms/s/0/e87f070e-7c96-11dc-aee2-0000779fd2ac.html?nclick_check=1

Currency traders were given a green light to continue selling the US dollar on Wednesday, as the International Monetary Fund said the greenback “remains overvalued” and rejected claims the euro had risen too far.

Contradicting Rodrigo Rato, the outgoing IMF managing director, who last week said “right now the dollar is undervalued”, the fund’s staff conclude the dollar is still too high. The multilateral lender also forecast slower growth in 2008 at 4.75 per cent, compared with 5.2 per cent expected this year.

The IMF’s new stance on the dollar will counter the arguments to the contrary made by France and some other eurozone members at this weekend’s meetings of the Group of Seven leading economies and the IMF’s governing body. They have been urging a change in language to temper the fall in the dollar, which dropped by more than 4 per cent against the euro in September alone.

The IMF, however, has little sympathy for struggling eurozone exporters hit by the currency’s rise. It says that even after its recent rise, the euro “continues to trade in a range broadly consistent with medium-term fundamentals”.

[The_Casual_Observer]

1. Oh shit! They've finally figured it out.

We're in big trouble now!

[Fovea]

2. The George W. Bush American fire sale.

Coming soon to an economy near you.
Damn near you.

[madrchsod]

3. if we had some leadership in the country

the dollar would`t be in this position. but when we have a legislative branch that is clueless and an executive branch that wants to blow up the world we don`t stand a chance

[Hutzpa]

4. You believe this shit,

then you'll beleive anything.


:think:

[nadinbrzezinski]

5. Well the peso was undevalued too

hold on to your horses.

Seen this movie before

Floor, what floor?

[whoneedstickets]

6. Americans' standard of living is going to take a big tumble...

We import an enormous quantity of goods (see our huge trade deficit), all this stuff is going to become more expensive. Buy your Japanese car soon if you plan too. Moreover, the rise in the price of raw materials imports due to exchange rates may spark inflation when manufacturers pass on this cost to consumers. Higher prices for imports + inflation = lower purchasing power.

In the long run this could be offset with employment growth as US exports become more competitive, but the up-tick in exports will lag the downward slide of imports by years.

Remember when Americans were assured of having a higher standard of living than their parents? Its over....