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"Because a weaker dollar helps U.S. exports by making American goods more attractive on global markets and may improve President Bush's chances for reelection, the United States was seen supporting a renewal of the September statement."

There isn't any real evidence that the cheaper dollar has had any material impact improving exports. To the extent the lower dollar limits imports by making them more expensive, I doubt that domestic consumers will view it as positive.

Why would any investor hold liqudity in the form of dollars at less than 1% when it could hold the same liquidity in Euro's or pounds at rates close to 3% with upside on the exchange rate?

Reason this pronouncement is likely to have adverse economic impact is that foreign exchange markets are likely to view it as a committment to continued declines in the value of the dollar which is likely to provide further incentives to convert dollar liquidity to other monetary assets.

Very few United States investors deliberately invest in Euros. There are transaction costs involved, liquidity preferences, and the fear of getting on the wrong side of the foreign exchange rate, which floats.

I have no idea what percentage of experienced, actively trading US investors play with foreign exchange, but it's very rare. I do know plenty who have told me that they prefer not to, for the reasons I've given.

United States consumers scarcely notice whether the dollar is up or down because they simply shift their preferences to whatever is cheaper. If California wine is cheaper than French wine or Australian wine, they don't complain.

People in other countries have a hard time comprehending this because they don't realize 1) how vast the US economy is and 2) how cheap goods are in general. To us, for example, commodities like rice and wheat and beans and T-shirts and toilet paper are so cheap as to be almost free.

A 20 pound bag of rice that can feed an entire family for a week costs less than $10, and can be earned with a couple of hour's labor at minimum wage. If foreign exchange rates make it cost 10% more, who cares? The majority of costs of finished goods are domestic, and are unaffected by foreign exchange. They're happy spending $5 for a box of rice cereal that contains almost no rice.

Further, because the Chinese yuan/renmimbi is pegged to the dollar, we don't see any change in the cost of Chinese goods, not lower or higher. The same.