A Game of Chicken

The U.S. pushes down the dollar, but will that help the trade deficit?

Around the world last week, the mood in international money markets could only be described as akin to panic. In Tokyo, frantic Japanese traders stayed at their desks even during a Jan. 15 national holiday to execute orders $ through branch offices and foreign subsidiaries, and through the week they dumped billions of U.S. dollars in favor of the local yen and the West German deutsche mark. In Frankfurt, harried West German moneymen followed suit despite reported efforts by the country's central bank to stem the landslide. In Manhattan, foreign-currency trading occasionally came to a halt as money merchants momentarily failed...

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