But do we have, at present, an effective mechanism to engineer an orderly depreciation of the US dollar against the currencies of surplus countries? So far, since the beginning of the financial turmoil exchange rates have not generally been moving in a direction that favours the correction of imbalances.
The dollar has appreciated by 13 percent in effective terms since July 2008 (Figure 16), as the turmoil engendered demand for dollar liquidity and large capital flows out of emerging markets have been seeking a safe haven in US Treasury securities.