October 19, 2007	Friday	Shawwal 6, 1428

WASHINGTON, Oct 18: US industrial leaders see a potential for problems from the prolonged weakness in the dollar despite the boost it may give to American exports, a manufacturing group said on Thursday.

The Manufacturers Alliance/ MAPI said in its quarterly outlook that the soft dollar is among several risks that present a “daunting challenge” to the global economy.

The group predicted that the dollar “is in the midst of an extended period of decline.”

“Global sentiment against the dollar is gaining traction, generating challenges for the short-term economic outlooks of major US trading partners,” the report said.

MAPI economist Cliff Waldman says the dollar could drop another five per cent against a basket of global currencies by the end of the year and may fall even further in 2008.

“As the dollar undergoes an extended period of depreciation, trade will be an increasingly positive contributor to US growth,” Waldman said.

“But, in the short term, the dollar’s decline generates inflation risks at home and economic growth risks for the economies of key trading partners.”

US industry leaders had complained in the late 1990s that the high level of the dollar made US exports less competitive.

Since then the greenback has fallen to record lows against the euro and its lowest level in decades against sterling, the Canadian dollar and some other currencies.—AFP