However, the widening of the short-term interest rate  BIS Review 15/2006  1  spread prompted renewed private sector investment in the dollar, which gained strength as a consequence. The appreciation of the dollar came to a halt last November. However, as things stand, the exchange rates between the major currencies are not conducive to adjustment of the external imbalances.
High rates of growth have so far made it possible to postpone the adjustment, but these conditions cannot last indefinitely. In 2005 various conditions arose that could help initiate a process of adjustment. Domestic demand accelerated in Japan, and to a lesser extent in Europe as well.