There is no Currency War – Goldman Sachs

This did make me laugh ! There’s no currency war as Japan has already won !!

There is no Currency War – Goldman Sachs.

There is no Currency War – Goldman Sachs

Whilst prominent leaders of BRICS countries unite in South Africa to tackle currency volatility and discuss plans to set up institutions that re-establish the roles of the World Bank and International Monetary Fund, Goldman Sachs believes that there is no so-called Currency War going on.

Yesterday, Ford CEO Alan Mulally complained that the weakness in the Japanese yen is giving an advantage to competitors who can sell for less.

However, experts from the investment bank Goldman Sachs believe that instead, we are just seeing ‘prudent monetary easing’ and thus it was the decline of real rates in some countries that has resulted in weaker currencies.

The prime examples are Japan, which has seen its currency fall due to rising inflation expectations and a decline in real rates; and the UK, which has engaged in outright monetary easing from the Bank of England.
Therefore, Goldman believes that such moves are for the benefit of the global economy as a whole, rather than a Currency War. The bottom line is that what we are seeing is simply classical monetary policy to boost domestic demand.

Meanwhile, at the BRICS summit in Durban, Brazil policy makers warned again of a global currency dispute as nations take reciprocal action to weaken their currencies and protect export industries. Brazil’s real has gained 2% to the dollar since the beginning of the year, while the South African rand has dropped 8.8%.

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