Falling Back to Earth

The dollar's steep decline creates benefits and perils

During the first half of the 1980s, the value of the U.S. dollar seemed to be going into orbit. While American consumers enjoyed cheap imports and luxuriated in foreign travel bargains, U.S. manufacturers complained bitterly that they were being clobbered by overseas competitors. But early last year the dollar bailed out, with a slight push from anxious international moneymen. At first the decline was a gentle drift, but it is now showing signs of becoming a free fall. Since December the dollar has dropped by 19% against the Japanese yen and 8% against the West German mark. It dipped last week...

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