Currencies:Like the last apple on an autumn tree, many people believe a fall in the value of the US dollar is inevitable. After falling through the psychological barrier of $1.30 to the euro some weeks ago, the dollar appears to have steadied in the $1.32 to $1.33 range. But in the longer-term a fall to $1.50 or even $1.60 is regarded as credible.
Economist Paul Krugman says a debate on whether a fall will occur is academic. "Instead the debate should be about two questions. First, will there be an abrupt fall in the dollar - a dollar plunge. Second, if there is a dollar plunge, will it be merely embarrassing or a source of major macroeconomic problems?"
For Ireland, the implications could be huge. Absorbing one-fifth, just over €16 billion, of all our exports last year, the US is by far our largest trading partner. One in seven tourists comes from the US and US multinationals support up to 90,000 jobs here.
At the heart of the dollar's troubles is that famous American fondness - consumption. Since the emergence of low cost exporters in Asia, American goods have been declining in relative attraction. As a result, its balance of payments on current account - the difference between what it earns abroad and what it purchases - is now 6 per cent of Gross Domestic Product, a level economists say is unsustainable.
According to Krugman, a decline in the dollar is the only way US exporting power can be restored.
Economic theory says that if your economy is strongly productive in exportable goods, like Japan or Germany, your currency will be strong of its own accord.
When the US economy experienced brief but strong productivity surges in the mid-1980s and late 1990s, the greenback strengthened. But these appear to have been temporary. And no matter what is happening to US productivity, the emergence of China and India is shifting the balance of global exports to the east.
Ken Dickson of Standard Life Investments bucks the trend of analysts who think the dollar is on the way down. He argues that its present weakness is short term and reflects the fact that interest rates in the US have been stalling as the European Central Bank rate rises make the euro a more attractive bet.
That trend has overdone itself, according to Dickson, and he predicts the dollar will rise from its present value of $1.33 against the euro to around $1.20 against the euro.
But his remark underlines what, in the eyes of many economists has kept the dollar strong, the willingness of foreign banks and investors to soak up the growing supply of dollars by investing in US-backed assets.
And that is where the debate centres. Those investors will eventually want a return and this is where Paul Krugman sees the threat of a "plunge" happening.
If expectations of a dollar decline grow sufficiently, that willingness could reverse itself.
If this happened in a crisis, the decline would be unstoppable.
For several reasons, there may be now be no going back. Central banks around the world are gradually increasing the share of reserves held in euro.
Higher oil prices have strengthened worries about the US economy and its degree of oil dependency.
In a manner quite like our own, the US economy is also sensitive to property prices and recent significant falls in house prices across the US have dented consumer confidence.
Earlier this year, the Economic and Social Research Institute (ESRI) estimated what might happen in Ireland if the US economy suffered both a sharp fall in the dollar and a reduction in its taste for both Irish exports and Ireland as a place to locate foreign investment.
The exercise was timely; last June the American Chamber of Commerce in Ireland reported that 43 per cent of its members were now concerned about the rising cost of doing business here.
If the dollar falls, there would of course be advantages but these would offset the disadvantages only partly.
Economically as well as geographically, Ireland is the European country with the closest ties to the US. A sharp fall in the dollar, if it happens, is going to test those economic ties.
