Currency

Euro crisis worsens the currency wars

10 Nov 2011

Once there was just one big controlled currency, China’s. Now there are three, as Switzerland and Japan try to counteract euro fear and safe haven flows. But these interventions could enlarge global imbalances. China is best placed to help, by letting the yuan rise.

Currency crossfire to hit emerging economies hard

29 Sep 2011

Money is flowing out of emerging economies. Countries that had complained about currency appreciation have had to prop up forex rates. Turkey and South Korea are vulnerable to hot money retreat. Poland and Hungary are caught in currency traps.

China’s pursuit of stability risks greater stress

20 Sep 2011

Some claim China’s economy is a bubble set to burst while others think slowing growth and inflation warrant looser policy. Ethan Devine of Indus Capital argues that in fact China’s economy is both too hot and too cold, with structural reforms needed to bring it back into balance.

Pseudo-devaluation could help euro periphery

20 Sep 2011

Greece and its ilk would have to quit the euro to devalue their currencies. But the IMF is offering a tip to mimic the effect: rejigging taxes to benefit exports and hurt imports, especially by hiking VAT. Portugal is trialing the idea. It has drawbacks, but options are scarce.

Only Drachmaization can save Greece and euro

8 Sep 2011

Regional comparisons suggest Greek living standards rose far beyond productivity, making austerity inadequate to rebalance the economy. Drachmaization would allow the market to set wage levels, induce other weak countries to reform without EU prodding and thus solidify the euro.

Swiss franc defence will work – at a price

6 Sep 2011

If the Swiss National Bank keeps its promise to buy “unlimited quantities” of foreign currency, its effort to peg the franc should succeed. Given the euro’s big risks, the central bank may lose money again. But the gamble is an attempt to prevent recession and deflation.

Nigeria deals the dollar another blow

6 Sep 2011

The oil-rich African state will invest about $3 billion of its foreign reserves into China’s currency. High inflation and closed markets make the yuan a poor choice. Nigeria’s goal may be to secure investment flows: still, it is another sign of the dollar’s weakening influence.