29 April 2011 22:37 [Source: ICIS news]
HOUSTON (ICIS)--The falling dollar helps make US chemical exports more attractive, but the impact of current exchange rates will not be felt for months, a American Chemistry Council (ACC) official said on Friday.
The US dollar fell on Thursday to its lowest point since the summer of 2008 against a trade-weighted basket of currencies, according to The Wall Street Journal.
Friday’s exchange rate against the euro was $1 = €0.67, compared with $1 = €0.76 on 29 April 2010.
Martha Gilchrist Moore, ACC senior director - policy analysis and economics, said that “…certainly the falling dollar helps make US chemical exports more attractive”.
She added, “There is a lag, however, between a currency change and evidence in the trade statistics. Economists refer to this as the J-curve effect and reflects the time it takes for firms and consumers to adjust their behaviour in response to the effective change in relative prices.”
The lag time can range from 6-18 months, Moore said.
“It depends a lot on the dynamics of what is being traded”, as well as the length of contracts and supply-chain relationships, she said.
However, Moore added that the US chemicals exports have been affected already by the low dollar, combined with emerging market growth and new supplies of ethane from shale reserves.
US exports of chemicals, excluding pharmaceuticals, were up by 11.3% year on year in February to $10.4bn (€7.0bn).
In 2010, the trade balance in chemicals, excluding pharmaceuticals, rose to $33.2bn from $25.2bn in 2009, Moore said.
($1 = €0.67)
Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
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