Currency Fluctuation and Manipulation

[Joanne98]

By Kindred Winecoff

Lots of talk of currency fluctuations lately. Sure, there's the U.S./ China spat over the RMB, but the controversies hardly end there:

Russia announced that the rouble, down 30 per cent since July, will be allowed to drop another 10 per cent against the dollar. Then it will try to bring the devaluation to an end.

The fall in sterling, which has halved in yen terms in the past 18 months, brought complaints from European politicians that the undervalued pound was an unfair advantage for the U.K. over the eurozone.

As for Japan, the 35 per cent fall in its exports last month was doubtless worsened by the 39 per cent rise in the yen against the dollar over the past 18 months, bringing it to a 14-year high. With western economies booming, Japan’s exporters could survive a strong yen. That is no longer the case. Asked on intervention, Japan’s finance ministry said it “should always be thinking about doing what may be necessary”.

What of China? The exchange rate of the renminbi to the dollar has barely budged since its appreciation halted last July. Amid market chaos, this was achieved only with careful management or, pejoratively, manipulation. But according to JPMorgan Chase, it has gained 12 per cent on a trade-weighted basis in the past year.


Nouriel Roubini was one of the only economists to predict an unraveling of the global financial infrastructure. But he predicted that it would occur because of a collapse in the value of the dollar; not because of over-leveraging and dodgy home loans.

Continued>>>
http://seekingalpha.com/article/116269-currency-fluctuation-and-manipulation