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7/25/08

USA Today: No end in sight for economic imbalance, IMF official says - by David Lynch

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No end in sight for economic imbalance, IMF official says - by David Lynch

Despite the dollar's sharp decline, the global economy is likely to remain seriously unbalanced between debt-heavy Americans and the USA's cash-rich trading partners, according to the International Monetary Fund's No. 2 official. "Large imbalances may be with us longer than we had originally envisaged," says John Lipsky, the fund's first deputy managing director. Since 2002, the dollar has fallen by 25% against the currencies of its major trading partners, taking into account relative price levels — among the largest such moves since 1973. The IMF now believes the dollar is closer to a sustainable value than it has been in a decade, while the euro is overvalued, Lipsky said in a speech at the Brookings Institution.

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