November 2010
Over The Wire Tissue Edition
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Weakening Dollar Reduces Risk of Commodity Price Declines

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The U.S. dollar has weakened significantly in recent months, Wilde reports, adding that "with potential price pressure looming in key grades as demand eases, we believe the weaker U.S. dollar reduces the risk of significant declines. This is primarily because the weak dollar squeezes margins of foreign producers. It reduces revenues in local currency terms, but does nothing to reduce local currency costs. A weaker dollar also aids domestic pricing dynamics in other ways, including boosting exports and limiting imports."



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