The dollar's exchange rate against the yen, which was fluctuating within the 108-112 yen range until early October, has begun to move downward in recent weeks despite such negative factors as the devastating typhoons and earthquakes that ravaged Japan.
Since the dollar is declining vis-a-vis the euro as well, the yen's recent movements reflect the weakness of the dollar rather than the strength of the yen. Of course, there were also political considerations, such as the U.S. presidential election, but let me focus here on the economic factors that have pushed down the currency of the United States.
First comes the expansion and accumulation of the current account deficit. Figures released Oct. 14 by the U.S. government show that the U.S. trade deficit grew faster in August than it has in recent trends. The deficit is forecast to get even bigger since crude oil prices remain high.
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