What is your theory about why the current administration in the US has allowed the dollar to fall? John van Slyke Jr.

David Woo: I believe the "benign neglect" policy of the administration stems from the belief that dollar depreciation is the least costly way (in economic and political terms) to achieve stabilisation or improvement of the huge US current account deficit. This belief has been reinforced in recent years by the fact that the pass-through of dollar depreciation into inflation has been more limited than in the past.