U.S. Investment Income Trend Ominous for Dollar

[Sinistrous]

Link Here.

U.S. Investment Income Trend Ominous for Dollar
Mon Mar 7, 2005 03:59 PM ET

By Jamie McGeever

NEW YORK (Reuters) - The ongoing decline U.S. net investment income suggests further weakness for the dollar lies ahead, analysts said.

"I expect that will become a drag on the current account," and the dollar, said Binky Chadha, global head of currency research at Deutsche Bank in New York.

Net investment income is the difference between income earned by U.S. investors on assets abroad, and income on U.S. assets owned by foreigners, and is a component of the U.S. balance of payments' current account which measures income from trade, workers remittances, investment income and other items.

Even though the United States owns about $2.43 trillion fewer assets abroad than foreign investors own in the U.S., higher rates of return abroad than in the U.S. have meant net U.S. investment income has been positive in recent years.

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A dilemma, this: raise interest rates to make investment more attractive and the income from existing investments goes up and worsens the current account.

The U.S. seems to be vulnerable to so many facets of the fact that foreign investors hold so much of our debt.

[denverbill]

1. Much as I believe what he said,

it's hard to take advice from someone named 'Binky'.

[Anakin Skywalker]

2. Damn! You Beat Me To It!

Hey! I was gonna say that! :(