As I mentioned earlier, the foreign exchange value of many Asian currencies declined in value relative to the dollar. The appreciation of the dollar tended to hold down and, in some cases, led to actual declines in the prices of goods imported into the United States. Before leaving this section of my remarks, I would like to reiterate that the reduction in commodity prices, while likely beneficial on net, was not beneficial to everyone. The Asian crisis has hurt many perhaps most producers of agricultural commodities because their prices have been so weak. My comments concerning the consequences for the U.S. economy of the recovery in Asia follow directly from my previous comments about the consequences of the Asian crisis.
Recovery is indeed underway in Asia.
I do not want to deluge you with numbers, but I would like to recite a few figures from the International Monetary Fund. As Asia recovers, we should see the reversal of capital flows financial capital should begin to flow into this part of the world rather than out of it. This reversal may have something to do with the upward pressure on interest rates in the United States this year. The higher rates have clearly taken housing construction down a bit from its peak, and may well be slowing automobile demand a bit. If long-term interest rates remain at current levels, we may see somewhat broader effects in coming months.