DM - Reaganomics on the Rhine
Article Abstract:
The Deutsche mark (DM) was the strongest currency in the three months to Feb 6 1990 due to developments in Eastern Europe and West German domestic policy. The DM appreciated 11.7% over the US dollar, 12.9% over the yen, and 3.6% over the pound sterling. The currency markets are anticipating that the influx of East German skilled workers will stimulate growth by adding to demand and productive potential of the German economy. An accelerating demand for money due to a prosperous economy that grew four percent in 1990 and the influx of immigrants will result in an excess of money demand over supply, and will lead to higher interest and exchange rates and a stronger DM. The situation is analogous to the strong US dollar in the early 1980s, which was a result of President Reagan's first-term economic policies.
Publication Name: Multinational Business
Subject: Business, international
ISSN: 0300-3922
Year: 1990
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US dollar - easing slowly with US interest rates
Article Abstract:
The dollar ended the calendar year of 1989 weak, experiencing an eight percent decline from 1.84 Deutsche marks per dollar (DM/$) to DM1.69 DM/$ from November to the end of December. The dollar declined seven percent against the French franc, but only experienced a two percent decline against the weakening pound sterling, while showing no change against a troubled yen. The dollar was pushed lower by declining US interest rates orchestrated by Federal Reserve Board (Fed) policy. In 1989, the M2 money supply grew 4.8%, and it is likely that the Fed will allow interest rates to slowly decline if the economy and inflation continue their slightly subdued pattern, a situation that is not conducive to a strong dollar.
Publication Name: Multinational Business
Subject: Business, international
ISSN: 0300-3922
Year: 1990
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