Drooping U.S. Dollar --Medicine or Poison?
The dollar will get sicker before it gets better. Most dollar doctors agree on that diagnosis, but they have starkly different views on what it means for the rest of us.
One school believes the sick dollar can be nursed back to health over time, and in the interim the illness will boost U.S. businesses, whose dollar-denominated exports will remain bargains. Another school holds that a busted buck could be the catalyst for an economic illness -- at home and abroad.
David Gilmore , a partner at research firm FXAnalytics, is in the former school, arguing that a weak dollar can help U.S. firms without causing inflation because of other beneficial influences. Then there's Bear Stearns Chief Economist David Malpass, a follower of the it-probably-gets-worse-for-everyone-from-here school.
A WEAK DOLLAR
See a rundown of who wins and loses with a weak dollar.
11/22/04
The Wall Street Journal asked Messrs. Gilmore and Malpass to engage in a debate about the dollar, conducted via e-mail. Here are excerpts:
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WSJ: Do you see the consequences of persistent dollar weakness primarily as favorable or unfavorable to the U.S. and global economies?
Malpass: The dollar's weakness in 2002 and 2003 was helpful to the global outlook because it stopped the deflation spiral. However, we are now at a point where additional dollar weakness will cause a moderate inflation problem. The dollar's value is very responsive to the Federal Reserve's actions and statements, so I don't expect it to weaken persistently from here. That would risk more inflation and force an interest-rate spike.
Gilmore: A weaker dollar, especially versus currencies from Asia, will support more U.S. exports by making them cheaper to foreign buyers, and fewer imports by making them more expensive to U.S. buyers. Worries that a weaker dollar will drive U.S. inflation higher are misplaced. Inflation and inflation expectations are well contained, reflecting high rates of productivity, slack in labor and product markets and fat profit margins at firms. So another 15% to 20% decline in the dollar will facilitate trade adjustment with limited consequence on inflation.
One potentially positive result of a strengthening euro would be if it compelled European companies to speed up restructuring of their work forces or encouraged European governments to stimulate domestic demand.
WSJ: How likely are either of these developments for 2005?
Malpass: In general, I think currency instability causes defensive, not constructive, changes. While some European companies might use dollar weakness as a positive catalyst, others will simply become more cautious. Already Europe's growth is slowing due to the uncertainty caused by the stronger euro and worries about a U.S. slowdown. On the government side, Europe's slowdown is making its already-large fiscal problem even worse. I think Europe's tax rates should be cut to encourage more work and investment, but I don't think a weaker dollar will make this any more likely.
Gilmore: Pressure on the region's exporters from a strong euro will force policy makers into action. A stronger euro will also slow gross domestic product as exports fall and imports rise, and a tax-reform agenda -- lower taxes -- will be given a needed boost. Indeed, firms feeling the pinch from the strong euro will press for needed political reform of the relatively rigid labor market. And industries that are crowded, like banking, will be under pressure to consolidate.
WSJ: Under what circumstances and at what level should the U.S. government intervene on behalf of the dollar?
Malpass: I don't expect the U.S. to intervene unless a situation developed in which the Robert Rubin rule could be invoked. [The former U.S. Treasury secretary] only wanted to intervene if it was pretty sure to work. In practice, this meant only considering an intervention if the dollar had overshot and was already beginning to move back the other way. That way, the intervention was going with the market, not against it.
Gilmore: The litmus test for when the U.S. government intervenes in currencies is when movements in exchange rates become disorderly, harming stocks and bonds. As long as the decline in the dollar is orderly, I do not see a need for currency intervention by the U.S.
WSJ: More than 40% of U.S. Treasury debt is held by foreigners. How concerned should we be that Asian central banks and other overseas investors will lose their appetite for U.S. securities as the dollar falls? Will other buyers take their place?
Malpass: A weak-dollar trend would cause all investors to re-evaluate their dollar exposure. Foreigners own mostly the lowest-yielding parts of the U.S. balance sheet. If they stepped back from U.S. Treasurys, the yield would rise slightly. I disagree with the criticism that the U.S. is at the mercy of strangers. Rather, we are at the mercy of our own profitability and our willingness to hold dollars.
Gilmore: As long as China pegs the yuan to the dollar and runs a large trade surplus with the U.S., it will have dollars to buy and dollars to invest. And a similar case can be made for much of the rest of Asia, including Japan. Assuming China soon begins a move toward a flexible exchange-rate regime, then the level of concern over financing U.S.-government borrowing rises. But the move to greater flexibility in currency regimes in this region will be gradual, not overnight, and as U.S. yields rise new buyers of U.S. debt will emerge.
WSJ: What will be the primary effect on the U.S. stock market?
Malpass: In 2002-2003, the dollar's decline was constructive, benefiting the economy. With the dollar continuing to weaken, however, stocks face a trade-off. Dollar weakness increases the nominal earnings of U.S. multinationals, but at the expense of likely increases in inflation and interest rates. I'm not as worried about whether foreigners sell their U.S. equities -- the issue is whether Americans, with their much bigger equity and real-estate holdings, begin to diversify away from the U.S. and the dollar.
Gilmore: Only in rare circumstances are stocks influenced by swings in the dollar. A weak dollar will eventually make U.S. stocks more attractive to foreign investors. European corporations that are cash rich, for instance, could be enticed into a U.S. buying spree if the dollar and stocks get significantly cheaper.
WSJ: What is your biggest currency-related concern for 2005?
Malpass: First, inflation may be higher than my expectation, which is that core consumer prices won't rise much above 3% in 2005. If inflation is more than that, the Fed would probably move quickly away from monetary-policy accommodation, risking an economic slowdown. Second, less likely but more serious: Momentum out of the dollar may already be strong enough to undermine the heavy global reliance on the dollar's value in long-term debtor-creditor relationships. Who wants to lend a billion dollars if the dollar may weaken another 10%?
Gilmore: The risk in 2005 is that there is a confluence of events that provide a powerful thrust to a falling dollar turning an orderly move down in the dollar into a disorderly move. Things like five straight monthly declines in U.S. leading indicators through October worry me. But not inflation for goodness sakes. I see little risk of a dollar crisis and a global recession.
WSJ: What possible currency surprises do you see for next year?
Malpass: As we know, currencies are hard to predict. I think the U.S. is stable and growth-oriented. There may be progress on tax, tort and social-security policy, any one of which would be a major new structural advantage for the U.S. over other industrialized countries. I think a possible surprise in 2005 is that the U.S. grows fast, U.S. interest rates rise, and the dollar's value recovers.
Gilmore: The February 2005 Group of Seven industrialized nations meeting in London will be a seminal event in the currency market where government officials reach a currency accord. This accord will specifically call for China to begin moving to a floating exchange rate immediately -- and more broadly for Asian currency appreciation. Europe will announce a series of measures to address competitiveness and lift domestic demand, including a [European Central Bank] rate cut. And the U.S. will make progress on balancing the budget deficit with tax reform and spending cuts.
美元贬值长远来讲是祸是福？
美元在形势好转之前还有进一步的下跌空间，这一点已经成为了大多数美元观察人士的共识，但他们在美元下跌的长期影响方面则存在著明显的分歧。
有一种观点认为，随著时间的推移，美元会止跌回升恢复到正常水平上来，美元的下跌将促进美国商业的发展，因为美元贬值可以提振美国的出口。但另一种观点认为，美元的贬值可能引发美国经济和全球经济的下滑。
研究公司FXAnalytics的合伙人大卫?吉尔摩(David Gilmore)便持前一种观点。他认为美元的走软有助于美国企业界的发展，而且还不会引发通货膨胀。而贝尔斯登(Bear Stearns)的经济学家大卫?玛尔帕斯(David Malpass)则相信后一种观点，认为美元的走软不但会拖累美国经济，还会殃及全球经济。
《华尔街日报》(The Wall Street Journal)近日以电子邮件的形式分别邀请上述二人对美元走势这个问题展开了探讨，下面是节选的讨论内容：
《华尔街日报》：你认为从大体上讲美元的持续下跌对美国及全球经济究竟是利大于弊还是弊大于利呢？
玛尔帕斯：由于阻止了通货紧缩恶性循环的发生，因此美元在2002年和2003年间的贬值实际上推动了全球经济的发展。但现在的情况是美元继续下挫将引发温和的通货膨胀。美元的走势对美国联邦储备委员会(Fed)的货币政策及政策声明非常敏感，因此我不认为美元会从现有价位持续下跌。但倘若真的出现这种局面，就有可能加剧通货膨胀状况并引发利率大幅攀升。
吉尔摩：美元的走软，特别是兑亚洲货币的走软将在促进美国出口的同时抑制进口。大可不必担心美元走软会推高美国的通货膨胀率。通货膨胀及通货膨胀预期仍在掌控之中，这要归功于生产率的提高、就业和消费形势的疲软及企业界利润率的丰厚。因此，美元从现有水平再贬值15%-20%将有利于改善美国的贸易状况，而且还不会对通货膨胀产生什么影响。
《华尔街日报》：欧元升值带来的一个潜在好处是可能迫使欧洲的企业界加快劳动力结构的调整步伐，或者鼓励欧洲各国政府拉动内部需求。你认为在2005年欧洲最有可能出现哪一种局面？
玛尔帕斯：我认为，总的来说欧元兑美元的升值会对欧洲经济起到负面，而不是积极的作用。虽然有一些欧洲企业可能会把美元走软视为一种积极因素，但其他欧洲企业可能会谨慎得多。由于欧元走强的后果尚不确定以及美国经济状况令人堪忧，欧洲经济的增幅已然放缓。从政府角度来讲，欧洲经济的放缓使得各国政府的财政状况雪上加霜。我认为欧洲应该下调税率，以鼓励就业和投资，但美元的走软无助于促使欧洲推出减税措施。
吉尔摩：欧元走强给欧元区经济带来的压力将迫使决策者采取行动。欧元升值将通过出口的下降以及进口的增加造成经济增长放缓，旨在减税的税收改革的进程将获得必要的推动。实际上，那些因欧元走势强劲而受损的企业将呼吁进行政治改革，为相对低迷的劳动力市场注入活力。银行等竞争激烈的行业将面临整合的压力。
《华尔街日报》：你认为美国政府应在什么情况下和什么水平上干预美元的下跌走势？
玛尔帕斯：我认为只有在前任财政部长鲁宾(Robert Rubin)的理论有了用武之地的时候美国才会干预汇市。鲁宾认为，只有在非常有必要的情况之下才应入市干预。这实际上意味著，美元在经历了过度上涨或下跌后已开始出现回调时美国政府才会出面干预。换句话说，干预是为了给市场力量助一臂之力，而不是与市场力量作对。
吉尔摩：判断美国政府是否干预汇市的决定性因素是汇市是否出现了打击股市和债市的无序波动。只要美元保持有序的下跌，我认为美国政府就没有必要出手干预。
《华尔街日报》：众所周知，外国投资者持有著超过40%的美国国债。如果亚洲一些国家的央行和其他海外投资者因美元贬值而失去了对美国证券的兴趣，那该如何是好？会不会有其他买家来填补他们走后留下的空缺？
玛尔帕斯：美元走软的趋势迫使所有的投资者重新评估他们的美元资产头寸。但外国投资者大多持有的是短期美国国债。如果他们抛售美国国债，美国国债的收益率只会微幅上升。有人批评说，美国经济要靠海外投资方能正常运转，但我不同意这种观点。我认为，美国企业的赢利能力和美国人持有美元的意愿才是支撑美国经济运转的真正动力。
吉尔摩：只要中国坚持钉住美元的汇率制度，并且对美国保持著贸易顺差，中国就会继续买进美元并投资美元资产。包括日本在内的其他亚洲国家也将如此。但如果中国不久后就开始实施更具弹性的外汇政策，那么美国政府依靠海外资金填补经常项目赤字的能力则会更令人堪忧。但亚洲国家放宽外汇政策将是一个循序渐进的过程，不会一蹴而就，而且收益率的上升会为美国国债引来新的买家。
《华尔街日报》：美元下跌会对美国股市产生什么影响？
玛尔帕斯：2002年至2003年间，美元的下跌起到了带动美国经济的作用。美国股市也从美元的下跌中受益。美元走软增加了美国跨国公司的名义收益，但也有可能抬高通货膨胀率和市场利率。我对外国人是否抛售美国股票并不感到担心，真正担心的是持有更多股票及房地产头寸的美国国民会放弃美国金融市场和美元，把资金投向海外。
吉尔摩：美元汇率波动对美国股市产生影响的情况并不多见。美元走软实际上会提振外国投资者购买美国股票的意愿。例如，如果美元大幅贬值的话，那些拥有大量现金的欧洲企业可能会掀起并购美国企业的热潮。
《华尔街日报》：你对在2005年和外汇走势相关的最大担心是什么？
玛尔帕斯：首先，我对明年通货膨胀的预期是不会明显高于3%，我最担心的是通货膨胀的实际状况超过我的预期。如果真的是这样的话，Fed可能就会加快加息的步伐，从而产生拖累经济的风险。其次，第二种情况虽然不大可能发生但后果更为严重：抛售美元的风潮削弱了美元在长期借贷关系中的重要地位。设想一下，如果美元进一步贬值10%，谁还愿意大规模借出美元呢？
吉尔摩：我认为2005年最大的风险在于一系列重大事件的发生导致美元的下跌从有序变为无序。例如，10月份美国的领先经济指标连续第五个月下滑等事态令我忧心忡忡。好在通货膨胀并不令我感到担心。我认为美元出现危机和全球经济陷入衰退的可能性很小。
《华尔街日报》：你认为明年外汇市场方面可能出现的意外情况有哪些？
玛尔帕斯：众所周知，难以准确预见到外汇市场的走势。我认为明年的美国经济可能稳中有升。美国有望在税收、民事侵权及社会保障政策等方面取得进展，其中任何的一项改革都有可能使美国获得超越其他工业化国家的显著结构优势。我认为2005年可能出现的一个意想不到的情况是美国经济呈现快速增长，美国利率升高，美元止跌回升。
吉尔摩：2005年2月，七大工业国集团将在伦敦召开会议。这对于外汇市场来说是一件大事，因为与会各国官员将就外汇问题发表一个联合公报。相信公报会呼吁中国立即著手向浮动汇率制转化，并要求亚洲各经济体允许其货币升值。欧洲方面会采取降息等一系列措施来改善竞争力及提振内部需求。美国也有望通过税收改革和削减开支在减少财政赤字方面取得进展。
