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Published online by Cambridge University Press: 26 March 2020
Between June and July the dollar rose by around 5 per cent against the other major currencies, despite central bank intervention to hold the dollar down. There have been two major factors behind this strength. Firstly, the US trade figures improved in April and May and were considerably better than the market had anticipated. This reflected both some reduction in the volume and value of imports and an increase in the level of exports. Sentiment towards the US dollar has also been affected by the strength of growth in the other major industrial economies.
In preparing this forecast we have benefited from our discussions with Simon Wren-Lewis, Andrew Britton and George Ray.
(1) This is relatively low by international standards. The German general government deficit is currently 1.7 per cent of GNP; the French deficit is 2.3 per cent of GDP. However, both these countries have considerably higher net private sector savings, which makes the financing of the new debt much easier.