Weak Dollar May Aid the U.S., But Promises Global Problems
Dow Jones Newswires</br></br>It all seems so simple.</br></br>The dollar weakens, U.S. goods and services become more competitive in world markets, imports slow as consumers balk at higher prices and the current-account deficit shrinks to a more manageable -- and, for policy makers, a less scary -- level.</br></br>This domino theory, though, plays down one very important practical point: The pain a weaker dollar inflicts elsewhere and the subsequent discomfort that makes politicians squirm. So as the dollar slide has accelerated in recent weeks, the regional battle lines have begun to be drawn.</br></br>That has been evident in the rising chorus of complaints from U.S. trade partners about the falling dollar. In the year ahead, economists believe relations could chill even further, with some suggesting the dollar's adjustment could spark real trade tensions.