§5302 Findings

Summary

Congress concluded that the United States and other leading industrial countries need to work together more on big economic and exchange-rate policies because current approaches hurt long-term growth and financial stability. How much a currency is worth affects who produces what and who trades with whom. The dollar’s rise in the early 1980’s helped cause the U.S. trade deficit. Exchange rates between major trading countries have become more unstable and sometimes create large, lasting trade imbalances that strain the world trading system and make planning hard for businesses and governments. Cross-border capital flows are now large compared with trade, move quickly, and add uncertainty and exchange-rate volatility. Some countries still try to keep their currency low against the United States dollar to gain advantage, which harms U.S. industries. A steadier dollar at a level that supports a sustainable United States current account balance should be a national goal. Coordination rules must be strengthened, and coordinated U.S. intervention in foreign exchange markets, when appropriate and done with other countries and policy changes, could help markets adjust more smoothly.