Will 2013 be the Year of the Currency Wars? - Real Time Insight
January 17 2013 - 9:36AM
Zacks
While the talk about the global currency wars is nothing new,
recent statements from the central bankers/policymakers in some of
the major countries indicate that 2013 may be the year of a major
war.
The term was coined by the Brazilian finance minister who said
that the loose monetary polices in the U.S. and the Europe were
hurting the emerging economies as the investors poured money into
higher yielding assets and currencies of the emerging
countries.
Brazil's government has been very active in its efforts to stem
the Real's appreciation, though capital controls and
interventions.
Russia’s central bank deputy chief said yesterday “we are on the
verge of very serious and confrontational actions in the
sphere…called currency wars”.
EuroGroup chief Juncker recently said that “Europe is no longer
willing to be the last economic player holding the toxic parcel of
an over-valued exchange rate”.
Bank of England Governor Mervyn King said in December
“concern is that in 2013 we'll see the growth of actively managed
exchange rates as an alternative to the use of domestic monetary
policy”.
Japan’s new prime minster Shinzo Abe has called for “unlimited
easing” by the BOJ.
Bank of Korea Governor stated a couple days back that the nation
will take an “active” response on the Won if needed.
Swiss central bank has expanded its portfolio of foreign assets
four times in the last three years in its efforts to keep the lid
on Swiss Franc appreciation.
China has always been suspected of manipulating its currency,
but the country actually allowed its currency to appreciate against
the dollar last year. Howver the new regime in China may not be
supportive of Yuan appreciation.
So, which currency will win the race to the bottom?
WISDMTR-CH YUAN (CYB): ETF Research Reports
PRO-ULS EURO (EUO): ETF Research Reports
CRYSHS-JAP YEN (FXY): ETF Research Reports
PWRSH-DB US$ BU (UUP): ETF Research Reports
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