Paul Krugman in his New York Times Blog writes about the declining dollar in Is This the Wile E. Coyote Moment?. I know it's been US policy to keep the dollar low for a few years but I don't really know enough to follow the implications. I know it had short terms benefits and was risky if it led to the dollar's collapse. Fears of dollar collapse? that Krugman cites gives some more info it got from this article, "Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East."
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