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International Perspectives
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The Bottom Line
Looking Ahead

Bottom line

Despite the continuing U.S. recovery, the currency markets have not been impressed. Market players are concerned chiefly about the current account deficit. Soaring investment flows in the late 1990s offset high import levels that fed the insatiable American appetite. Now with equities and other investments looking more attractive, money could go elsewhere for better returns. Although the dollar is being bashed by the economy, the fact remains that the U.S. is showing more signs of life than Asia or Europe. But not helping are the twin deficits (current account and a newly rising U.S. budget deficit) and political uncertainties ranging from the threat of new terrorist attacks to a possible invasion of Iraq. A cheaper dollar makes exports from overseas more expensive for Americans; it would do well for the markets not to forget that overseas countries are still very reliant on U.S. purchases to sustain growth.

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