Thursday, June 18, 2015

FT: Merkel Ignites 'Currency War' Worries

When Jim Rickards wrote his book 'Currency Wars' in 2012, no one was using that term that I can recall. Since then it has moved into headlines and stays there even today. This Financial Times article says recent comments by Angela Merkel "has reignited fears that world leaders are stoking currency wars". Below are some quotes from the FT article.


"German chancellor Angela Merkel has reignited fears that world leaders are stoking currency wars by saying that recent strengthening in the euro was making it harder for eurozone countries such as Spain and Ireland to reform.

Her words had an immediate impact on the euro, sending it down 0.9 per cent against the dollar to $1.1150, although the single currency recovered that loss yesterday afternoon. The euro had already come under pressure as worries over a Greek exit from the eurozone weighed on investors."     . . . . . . . . .


Here's another FT article that explains why Central Banks are building up cash reserves in anticipation of possible problems when they try to end QE and low interest rate programs.

(quote from the article)

"This is the dilemma of all developed market central banks that have engaged in unconventional monetary policies. Since their actions have driven up the value of financial assets, it is hard to imagine that their exit will not reverse the surge in value given that economic fundamentals have not improved much, though the principal mandate of central banks is not to produce massive profits anyhow."

No comments:

Post a Comment