Will it Be Possible for the US Dollar to Maintain its Value Against Major Currencies Under the Growing US Government and Trade Deficit?

Abstract

Review of literature explaining factors impacting the exchange rates and the models/theories supporting the exchange rate behavior. Analyze the same with respect to the US Dollar. Check statistics to see if there is any correlation between the US Budget deficit and the exchange rate of US Dollar with major currencies like Canadian Dollar/Euro/Japanese Yen/Chinese Yuan Renminbi. Check statistics if there is any correlation between the US Trade deficit and the exchange rate of US Dollar with major currencies like Canadian Dollar/Euro/Japanese Yen/Chinese Yuan Renminbi.

Keywords: US Budget deficit, US trade deficit, International finance, Foreign Exchange, International Lending and Debt Problems, Financial aspects