Posts Tagged ‘ currency war ’

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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Bank of Japan ready to declare war on deflation ???

Is the Bank of Japan ready to declare war on deflation ? I believe so , Kuroda said last week he would take aggressive action to stop deflation and to increase the growth of the economy .
I personally believe he will look at around $1billion a DAY ! At the moment the BOJ has plans for $1billion every 2 days starting next year ,
His comments last week gave us the impression he wants action now rather than later !

“It would be natural for the BOJ to buy longer-dated government bonds in huge amounts,” Kuroda said in a confirmation hearing in parliament .

I personally see no real change until the up and coming election has been won by Prime Minister Abe . Reason for this is that Japan have been sheltered from high energy price , commodity and food price and residents in JAPAN haven’t seen their bills increase as most other G8 countries .Weaker Yen means higher prices for consumer ( voters ) and that means no votes !

Kuroda has still not been confirmed as the new Bank of Japan governor but the markets have already taken this as a given , Nikkei goes up 2+/-% in a day.
A 1% increase means the Nikkei adds around $23billion !!!

I see Abe drawing up a battle plan for war , at the moment he is just appointing his “generals” , summer time I can see the full war!

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