Weak US dollar weighs on markets (BBC)

[eppur_se_muova]

Last Updated: Monday, 15 May 2006, 17:01 GMT 18:01 UK

Weakness in the US dollar has continued to overshadow global stock markets as investors offloaded exporters on fears that corporate earnings will decline.

Commodity markets have also slumped, with traders beginning to ask if recent record prices were justified.
***
Analysts said that US policymakers are signalling they are happy for the dollar to decline by not aggressively talking up the currency.

A falling dollar would benefit the US economy by making US exports cheaper, and could help reverse the $700bn (£372bn) trade deficit with the rest of the world.

However, the dollar's fall could also increase the cost of US imports, thus fanning inflation and forcing the Federal Reserve, the US central bank, to continue to increase interest rates.
***
more: http://news.bbc.co.uk/2/hi/business/4771495.stm