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Fragile Work of Art

Fragile Work of Art THE United States which began by appearing to fight off a devaluation of the dollar has ended by fighting for, and securing, a larger devaluation than its international trade competitors in the Group of Ten were initially prepared to concede. The United Kingdom and France, for instance, have, by agreeing to the 7.9 per cent devaluation of the dollar, while leaving their old gold parities unchanged, conceded a competitive advantage to the United States which is definitely larger than what both countries were prepared to countenance even a few weeks ago and which both might soon discover is larger than they can afford. The Belgians and the Dutch have also accepted large-than expected appreciation of their currencies (1-1.5 per cent) in relation to the dollar. The currencies to appreciate the most have been, of course, the yen (17 per cent) and the D-mark (185 per cent), though there is a lurking suspicion that this leaves the D-mark still undervalued. In any event, the frame's advantage over the D-mark has been cut from about 12 per cent to 5 per cent. It has been estimated that, in return for abandoning the 10 per cent surcharge on imports and the buy -American tax incentive for in vestments., the US has on average secured a 9-10 per cent appreciation of the major currencies against the dollar which could lead to a $ 7 billion improvement in its current balance.

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