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U.S. Treasury’s International Capital Statistics Update
We have argued for years there is no long-term relationship between capital flows and movements in the dollar. We can argue a rather different point now: The level and course of the dollar affects the diversity of foreign investors. The Bank of Japan served as the investor of last resort when the dollar was weak. Now that the dollar is firming, other investors have emerged and lowered the dependence of the U.S. on the kindness of a single stranger.