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Will a Weak Dollar Threaten Global Recovery?

Published: Tuesday, 20 Oct 2009 | 2:20 PM ET

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By: Krystina Gustafson
Special to CNBC.com

Currencies may play a role in the global economic recovery down the road, but in the short-term, the relationships among major currencies won't impede a rebound, said John Lipsky, first deputy managing editor of the International Monetary Fund.

Instead, Lipsky's biggest concern is that governments will withdraw their stimulus funds too early, as a sustainable rebound relies on a successful transfer from public to private sector demand.

"We think we're past the worst. We think we're headed for rather broad-based but moderate growth in 2010," Lipsky said.

"But that assumption...depends on the implementation of stimulus measures already promised for next year."

Lipsky admitted that these stimulus programs will cause every advanced economy to face substantial fiscal challenges over the next 10 to 20 years, as their governments have increased spending to such a large degreee. But that doesn't mean these programs aren't needed, he said.

Track the Dollar and Other Major Currencies

"Central bankers around the world are going to have to be attentive to their own economies and inflation risks," he said. "It's not one size fits all, but in general, there's still a need for stimulus."

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