Word: floats
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Already, the Nixon plan had made some solid gains. By far the most important was Japan's decision to float the yen on international currency markets (see BUSINESS). In addition, some banks?including New York's Chemical Bank and Atlanta's Trust Company of Georgia?reduced interest rates on consumer loans. Such rates are not governed by the Nixon program, but the Administration has applied strong pressure on bankers to freeze or lower them voluntarily...
...down slightly in money markets, but nothing like the expected 12% to 15%. At the close of trading last week, the franc had risen by 2.8% in relation to the dollar, the mark by 7.6%, the Swiss franc by 2.5%, and the pound by 3%. Put on a limited float at week's end, the Japanese yen rose as much as 7% in the first day's trading...
Closed Window. Nixon's dollar moves constituted an invitation to foreign governments to float the dollar against their own currencies by allowing the factors of supply and demand to dictate its value overseas. His aim was to force the U.S.'s major trading partners, especially Japan and the Common Market countries, to increase the value of their currencies-and thus the cost of their exports. Once Nixon shut the gold window, the dollar was expected to drop, and the value of foreign currencies to go up. The money exchanges of the world had been effectively closed since...
...FLOATING THE DOLLAR. Though Alan Greenspan believes that "the only viable option was to let the dollar float," he warns that if it is left unpegged for too long "trade could be stifled." Joseph Pechman says: "Strengthening the dollar is a move that is long overdue." As David Grove summarized: "The dollar has been overvalued for some years, but no one wanted to recognize that. Now the Administration wants the dollar 'devalued' enough to get a strong balance of payments position. That could come very quickly and be a big and dramatic improvement...
...thing that can happen to reverse the inflation is to spur the economy. For that, we should move up the tax cuts already authorized for 1972 and 1973, making them immediately applicable. As a last resort, we could lower the value of the dollar, perhaps by permitting it to float until it found its proper relationship to other currencies. That would reduce the prices of U.S. exports in the world market and drive up import prices." GARDNER ACKLEY, former chairman (1964-68) of the President's Council of Economic Advisers. "The Administration could easily put another $8 billion...