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Dollar falls as IMF fails to resolve currency war
Business Digest: Japan may intervene to weaken the yen further as China opts for ‘gradual’ currency rebalance
The dollar has slipped to a 15-year low against the yen, raising the possibility of further intervention by Japan to weaken its currency, the strength of which is harming exports.
The dollar fell to ¥81.37 before recovering slightly to ¥81.99. The dollar's lowest ever level against the yen is ¥79.95, which it reached in 1995.
The fall came after a weekend in which meetings of the International Monetary Fund and G7 failed to come up with any solution to the incipient global 'currency war', which has seen a number of countries recently take action to reduce the value of their currencies in an attempt to gain advantage for their exporting industries.
The biggest tug of war in this contest is between China and the United States. The US accuses China of keeping its currency, the yuan, artificially low.
Zhou Xiaochuan, the governor of China's central bank, accepted that his country must allow the yuan to appreciate, but said it would do so gradually.
"In China, a lot of people believe in Chinese doctors. In western countries, they believe in western-trained doctors," he said.
He added that the argument over currency was like a contest between "pills that solve your problem overnight" and Chinese-style treatments of "10 herbs put together... that solve the problem not overnight, but maybe in one month or two months".
Read a full report at BBC News. ·
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Quite why anyone thinks that involving the IMF in a global currency war is of any use or relevance is beyond me. The IMF has the money given to it by governments, mostly the USA, and will ultimately do what it is told by the Fed and the POTUS. They get fat salaries and need to eat, after all. And the annual lending capacity of the IMF is well under 1000billion (one trillion) USD, so it could bankrupt itself bailing out Greece and Ireland if it tried hard enough. Who are its current biggest debtors...any guesses?...Did you guess 1) Romania, 2) Ukraine, and 3) Hungary? If yes, go to the top of the class. And its debtor countries tend to stay on the books for decades: its loans are addictive, not curative. IMF bad, free market good.