cheap dollar, cheap stuff


	cheap dollar, cheap stuff

Victoria Barret

11-20-2007 11:59 AM

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tags:

fed, dollar, inflation, trade

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/c7a98675-a1a8-4a46-b510-40d4b1ce4557/74E6D4AD-506D-48ED-9FAF-BC15E38B8646/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://online.wsj.com/article/SB119542708759397293.html" href="http://online.wsj.com/article/SB119542708759397293.html" style="font-size: 11px;">online.wsj.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article/SB119542708759397293.html">Moreover, for Fed policy makers, the weak dollar has been a timely benefit: It is boosting U.S. exports, which helps ease the pain of a severe housing downturn and credit crunch.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article/SB119542708759397293.html">Core inflation, which excludes food and energy, has remained tame in recent months, within the 1%-to-2% comfort zone for some Fed officials. But the dollar's decline could boost the public's expectation of future inflation, creating a self-fulfilling effect that pushes prices higher.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article/SB119542708759397293.html"><P class="times">A 10% decline in the value of the dollar -- the drop seen over the last year -- might be expected to raise the price of imports by 10%. But the actual pass-through is a fraction of that. Studies have found that only one-quarter to one-tenth of a currency depreciation gets passed through as higher prices for imported products.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article/SB119542708759397293.html">From the mid-1970s through the 1990s, the pass-through rate was as high as 50% -- meaning a 10% drop in the dollar would raise import prices by 5%. This decade the pass-through rate has been less than 25%.</blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/74E6D4AD-506D-48ED-9FAF-BC15E38B8646/blog/" title="blog or email this clip"><img src="http://content9.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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