Friday, April 19, 2013

G20 pledge - no competitve devaluations - oh really?

The G20 is supposed affirm their commitment to not use competitive devaluations to help exporters. Did Japan miss the message? What about the US? What about the UK? While it may not be explicit, the QE rage is supposed to drive down the currency levels and help exporters. This i a natural part of easing monetary policy. I guess central banks are just not supposed to say anything about what is the intent of policy. 

There is a need for countries to not form a currency war through devaluations, but it is hard to enforce and hard to distinguish between active monetary policy. The intent is good, but it will be hard to enforce. 

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