ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Coal- Price Increase No Panacea

overvalued is generally accepted, not only outside but also within the United States. However, if the government's massive budgetary deficit has to be financed, and that too largely out of foreign savings, this can only be done by offering rela'ive ly high interest rates on dollar investment. And this can be an un-ending process. The higher the US budge' deficit and the greater correspondingly is the US need for foreign swings to finance its budget deficit by offering relatively higher in terest rates, the more does the dollar tend to be overvalued externally. This over-valuation adversely affects the US current account posi ion. But the more the current account position deteriorates, the greater becomes the pressure on the US authorises, given their need for foreign funds, to raise interest rates still higher.

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