They certainly swing a big stick. But the ECB’s got one, too, and they don’t hit very hard with theirs, either. I don’t have a chart handy, but I think the ECB’s rate has been around the 2% – 3% range for as long as I can remember. Hardly tight monetary policy, and, still, the euro is up 50% or so against the dollar. My argument is that fundamentals matter much more than rates over the long term. And those fundamentals showed the dollar being too strong for its own good at the end of the last decade. Remember that the last coordinated central bank intervention (Fed, ECB, Bank of Japan) was in support of the euro. Nobody’s making any noise yet to support the dollar, which shows that the central banks are much more comfortable with today’s exchange rates than to those of 2000.
