CONUNDRUM ; As Kit Juckes, head of foreign exchange at Société Générale, put it in a note early Monday: “The conundrum is clear — the world’s leaders from G-7 to G-20 approve of policies to boost growth, while disapproving of policies to boost growth at the expense of others.
“So while currency manipulation is bad, zero rates and [quantitative easing] are good in times of trouble. And if those policies happen to cause a currency to weaken, well, that’s OK” in the eyes of the G-20, Juckes said.
“Currency war” is a term that was coined in 2010 by Brazil’s finance minister in response to the U.S. Federal Reserve’s quantitative-easing strategy.
The Fed’s aggressive easing undercut the dollar. Loose policy among other major economies helped create a flood of funds into developing economies, such as Brazil, making for an unwelcome rise in the value of their currencies.
CONUNDRUM ; As Kit Juckes, head of foreign exchange at Société Générale, put it in a note early Monday: “The conundrum is clear — the world’s leaders from G-7 to G-20 approve of policies to boost growth, while disapproving of policies to boost growth at the expense of others.
ReplyDelete“So while currency manipulation is bad, zero rates and [quantitative easing] are good in times of trouble. And if those policies happen to cause a currency to weaken, well, that’s OK” in the eyes of the G-20, Juckes said.
“Currency war” is a term that was coined in 2010 by Brazil’s finance minister in response to the U.S. Federal Reserve’s quantitative-easing strategy.
The Fed’s aggressive easing undercut the dollar. Loose policy among other major economies helped create a flood of funds into developing economies, such as Brazil, making for an unwelcome rise in the value of their currencies.