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US current account deficit: USD devaluation?!

 Chart of the Week: America’s current account woes

Tim Baker at Deutsche Bank argues the US’s larger current account deficit relative to other major economies reflects an expensive dollar. But President Donald Trump’s crusade to weaken the dollar and reduce the US’s trade deficit could be a double-edged sword. 

 “The Trump administration’s effort to narrow the US trade deficit means fewer dollars will flow overseas, reducing the need for those funds to be recycled back into US securities,” notes Elias Haddad at Brown Brothers Harriman. Net portfolio inflows, which have come in at nearly 2 per cent of GDP in the past year, have helped fund the current account deficit, Baker notes.

 

 

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