Currency

Moody’s shaming brings UK gain in currency war

25 Feb 2013

The loss of triple-A is humiliating, but that’s now history. The lingering effect of Moody’s action is a weaker pound, and that should serve to stimulate exports, GDP growth and inflation. If so, there’s less risk of unlimited BoE money printing when Mark Carney takes charge.

Ethical economy: The menace of financial markets

20 Feb 2013

Are free and open markets for stocks, bonds and currencies the glory of the capitalist system? Quite the contrary. Because financial assets have no clear value, these markets are always too influenced by disruptive wild emotions, and encourage destructive greed.

Long-view investors need to embrace FX appeal

18 Feb 2013

Old-school asset managers often see currencies as good for nothing but cost, risk, and occasional windfalls. But recent yen and euro shifts graphically show that exchange rates can bring handsome returns. If FX is where the action is, that’s where active asset managers should be.

Counterpoint: The UK would be mad to join the euro

15 Feb 2013

When Edward Hadas reviewed the arguments on Britain joining the single currency, he said the UK’s economic position would be improved by membership. But why sign up to a project which remains flawed, even after the latest anti-crisis measures?

G7 only adds to global currency confusion

12 Feb 2013

In a four-sentence statement, the finance ministers of the world’s leading powers have managed to ignore the problem of inadvertent competitive devaluations, contradict themselves and make an empty promise. Currencies still look like the global economy’s weak point.

Currency war is not worth fighting

29 Jan 2013

The downside of competitive devaluations is clear: international ill will and higher risks of both inflation and financial disorder. The upside is less clear. In developed economies, devaluations don’t always boost exports. They can also defer helpful reforms.

China FX swap may blur Bank of England mandate

28 Jan 2013

The central bank is under pressure to set up a swap facility with its Chinese counterpart. Doing so would boost renminbi trading in London. But the BoE’s main concern should be financial stability, not the City’s competitiveness. Confusing the two would be a mistake.

Europhobic pound faces year of two halves

23 Jan 2013

The pound is sliding. An EU membership referendum is a definite new negative. Trade and public finance data feed the doubts. A poor GDP figure and snow may compound the weakness. But the UK is still expected to outpace the euro zone this year. Decline may turn into opportunity.

Global currency war would lack euro fighter

22 Jan 2013

Jens Weidmann is afraid that major central banks are bowing to their governments’ pressures to push down currencies. The Bundesbank head wants Europe to stay above the fray. For once, he and Mario Draghi agree. Japan’s new policies won’t tempt the ECB to take up arms.

Japan comes dangerously late to currency war

7 Jan 2013

Trash-talk from the world’s third-largest economy has pushed the yen down some 12 percent since September. But Japan is a Johnny-come-lately to the global contest to weaken currencies to support growth. Opening another front at this point only makes the contest more dangerous.

Egypt’s Brotherhood meets financial reality

7 Jan 2013

The fall of the pound creates inflationary pressure and capital controls underscore the shrinking of foreign reserves. Egypt’s ruling Brotherhood must finalise an unpopular deal with the IMF or risk a currency meltdown. Neither option is appealing ahead of elections.

Iran at risk of draconian response to rial slide

3 Oct 2012

Tehran’s attempt to ease pressure on the currency helped trigger this week’s sudden and sharp slide. Iran has limited short-term options to stem the panic. A deeper rebalancing of the economy is required. But in tough times that might just result in a more bullying state.

World without dollar primacy a blast from the past

26 Sep 2012

Goldman boss Lloyd Blankfein reckons the dollar’s reserve status may be at risk. Having no dominant currency would hark back to the 18th century, when silver pieces of eight competed with many other coins. Specialist currencies might emerge, but trading costs could rise.

Egypt’s posturing pound pledge may return to bite

28 Aug 2012

Mohamed Mursi has ruled out a devaluation days after a senior advisor acknowledged its necessity. But Egypt would need a swift recovery in tourism and foreign investment, the end of insecurity and a deal with the IMF, for its president not to eat his words.

US derivatives leader makes timely push on Europe

20 Aug 2012

CME plans a London derivatives exchange. By starting in currencies it avoids tackling rivals NYSE and Deutsche Boerse head-on. The timing is also canny. Private trading is migrating to bourses and moving earlier might have made it easier for NYSE-DB’s merger to win approval.

Ethical economy: The touchstones of Yap

11 Jul 2012

The Pacific island of Yap used two-tonne stones as currency. The odd system worked because people believed in it. The modern monetary system is also faith-based, and that faith has been shaken by the financial crisis. Purification is needed to strengthen the value of money.

Scots aim to break Europe’s working currency union

9 Jul 2012

Europe does have a successful currency, fiscal and banking union - in the United Kingdom. Scottish nationalists want to go backwards, towards the weaknesses of the euro zone. In Edinburgh as in Brussels, it’s dangerous to let politics get the better of financial reality.

Anti-euro prize strengthens case for euro

5 Jul 2012

The offer of 250,000 pounds for the best way to untangle the single currency was supposed to make a breakup more plausible. The winning Wolfson Prize entry shows how it might be done. But the proposal is so messy that it supports the opposite case: a breakup shouldn’t happen.

Hong Kong, enjoy your peg while it lasts

27 Jun 2012

Hitching the Hong Kong Dollar to the U.S. greenback brought 30 years of something like stability. Now it brings inflation and high property prices. Yet the alternatives are messy, and the peg has a symbolic value. The status quo is best, until China offers a good replacement.

India’s finance minister goes out with a flop

25 Jun 2012

Talk about over promising and under-delivering. Pranab Mukherjee inflated the market’s hopes that he’d take bold measures to boost investor confidence, but came up with a few small tweaks - on his last day as finance minister. Hopefully his successor will talk less and act more.