Global economic developments this year, along with the impact of safe-haven investment flows have led to the appreciation of the dollar in global markets, contributed to the high level of unemployment in the U.S. and increased the chances for a double-dip recession in America. All these developments have further highlighted the international tensions over exchange […]
Another year has sped by with more change and economic uncertainty throughout the global markets. From a journalist’s viewpoint, 2010 was filled with some of the most dynamic and complex economic trends and global market events possible. For instance, the Euro zone debt crisis, the global currency war, coverage of the international currency war – announced by Brazilian Finance Minister and precipitated by Ben Bernanke’s quantitative easing monetarist policy – the perils of high-frequency trading, and the burdensome economic impact of two-front warfare on the domestic agenda are just a few issues that led the Global Markets through a year of risk, volatility, turmoil and uncertainty.
Paraphrase of NYTs Helene Cooper’s 26 Nov 2010 article: A fundamental tenet of foreign affairs doctrine holds that sovereign nations will always define and act in their own national interests, and will rarely against their own interests. Somebody needs to tell that to the United States when it comes to China, many foreign policy experts say. A key part of America’s relationship with China now turns on a question that is, at its heart, an interminable conundrum: How to get Beijing to do what its leaders don’t believe are good for their country, but will benefit ours? From economics to climate change to currency to Iran and finally culminating with North Korea last week, America has sought to push, prod and cajole China, to little or no avail.
G-20 world leaders meeting in Seoul, South Korea, concluded the summit late Friday by issuing a joint communiqué, with no specifics, agreeing only in general terms to curb “persistently large imbalances” in saving and spending. But deep divisions, especially over the US-China currency dispute, left G-20 officials negotiating all night to draft a watered-down statement for the leaders to endorse, keeping alive a dispute that raises fears of a global trade & currency war, and fears of rising protectionism among nations.
‘Is this a currency war or what? Fast-growing nations like Thailand are trying to devalue their exchange rates to bolster their export-driven economies. In Washington, where “strong dollar” has been the mantra for years, policy makers are taking steps that could make the already weak dollar weaker still. These uncoordinated moves among global central banks to weaken their respective currencies is precipitating a global currency war.
There are mounting anxieties in Global capital markets over the divergence between China’s economic policies – specifically, its currency exchange rate policies — and the relationship that currency valuation has to a sputtering economic recovery in the rich Western economies.