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Brazil's Finance Minister Guido Mantega warned last week that a new currency war could be in the offing. The ECB had again depreciated its currency as Europe tried to tackle growing debt and low growth rates. Under the leadership of Jean- Claude Trichet the ECB tried to steer the value of the Euro that had led to trade imbalance of Greece, Spain and Portugal , all of whom had lost lucrative export markets when they had joined the strong Euroclub.The Euro that had shot up quickly went to reach a new low level of $1.40 just ahead of the Washington conference of the IMF today
In the Asian markets China refused to raise the value of the Renibi despite intense pressure from the US Adminstration.It also brokered solidarity amongst the BRIC nations as well as the poorer Asian nations to resist Washington's effort to browbeat them to a currency revaluation. China says that though it has got excess cash today and and a buoyant trade surplus, it houses the largest poor population of the world and needs a high leverage to balance the same with growth. Russia confirmed earlier today that the BRIC nations under a Brazil driven initiative have agreed to keep their currencies competative, and at the same level, if needed with market intervention.
Europe also has been giving the same logic, that it is the poor they protect while intervening to pull down the Euro. Not to be left behind the US happily saw the Dollar plunge to a 15 year old against the Yen to 81.38 Yen, which confirmed that the Bears were driving down the prominent currencies the US Dollar and the Euro in search of volatility.
Since both currencies are rising against the Yen , which has been the most susceptable to market driven volatility of late, it is assumed that the
real roller coaster ride is about to begin. Since the currency markets quickly affect the commodity markets and the oil prices, these must be kept under close watch before the advent of the winter which could be unexpectedly cold especially in Asia this year due to heavy rainfall early in the season
Re: “... the US happily saw the Dollar plunge ...”
ReplyDeleteIf the stated value, of “Federal” Reserve notes, declines enough with respect to copper and nickel, the 1946-2010 U.S. Mint nickels, composed of cupronickel alloy, could become somewhat rare in mass circulation.
The October 7th metal value of these nickels is “$0.060639” or 121.27% of face value, according to the “United States Circulating Coinage Intrinsic Value Table” at Coinflation.com.