Merk Insights - U.S. of A(sia) - United to Weaken the Dollar?!
In the past few weeks, Bernanke has become ever more vocal in
encouraging emerging market countries to allow their currencies to
appreciate against the dollar; and Obama and Romney have both been
advocating for a weaker dollar versus specifically the Chinese RMB. In
the recent presidential debates Romney continued his call for declaring
China a currency manipulator, and Obama proudly stated that the RMB had
appreciated 11% against the dollar since he took office. It has actually
been about 9% according to the data we look at; nevertheless, the point
that both were clearly trying to make is that a weaker U.S. dollar is
in our economic best interests. Likewise, in an IMF speech
Bernanke essentially admitted that accommodative monetary policy in the
U.S. causes upward pressure on foreign exchange rates between emerging
market currencies and the dollar, and suggested that foreign central
banks allow that dollar depreciation to take hold, rather than intervene
to prevent it.
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