WASHINGTON — The dollar keeps falling around the world, tumbling against other major currencies because investors expect the Federal Reserve to pump more money into the economy next month to try to stimulate growth.
Since late summer, when Chairman Ben Bernanke first hinted that the Fed was ready to act, anticipation of the move has rippled across the economy: Stock prices have surged. So have oil prices. Commodities such as gold, silver and corn have risen. Treasury yields have slid. Mortgage rates have sunk, too, along with yields on money markets and CD accounts.
The steep decline has even raised worries of a global currency war in which nations would compete to keep their currencies from rising in value as the dollar sags.
On Thursday, the dollar fell to a 15-year low against the yen in Tokyo, after flirting with a post-World War II bottom. It also touched its lowest level against the euro since January. The dollar has slid more than 10 percent against the euro in the past three months.
What does all this mean for American consumers and businesses?
For one, imports can cost more. So does travel abroad. Goods from U.S. companies become cheaper for foreigners, and oil tends to cost more. Even the likelihood of some new price bubble in investments such as stocks or real estate could rise.
When it is all totaled, the U.S. economy is so weak right now that the Fed considers a cheaper dollar to be a good thing. That's especially true when a low dollar is accompanied by super-low interest rates.
Those cheaper rates, on mortgages, corporate debt and other loans, could help rejuvenate the economy. Consumers and businesses are more likely to borrow and spend — at least those who can afford to or who qualify for credit. The idea is that higher spending would course through the economy, boosting corporate revenue, creating jobs and driving down unemployment.
"The weaker dollar should give the United States more growth and more inflation at a time when the country is struggling with low growth and low inflation," said Paul Dales, senior U.S. economist at Capital Economics.
