CFAI Book 3 pg. 103 -
In 2001-2002, private sector deficit was reduced though government cut taxes and shifted to deficit from surplus. However, the dollar depreciated against euro as current account deficit needed to be 4%-6% range to balance the internal savings balance.
Can anyone explain that last part? Does it mean current account deficit was originally very high and now since it needs to be reduced to 4-6% therefore the dollar depreciated?
Thanks in advance