Thursday, March 12, 2009

Competitive Devaluation

Voltron says: From the Financial Times:

If the world is really following the script of the 1930s, then we are due for competitive devaluations, as nations attempt to make [exports] more competitive at the expense of everyone else.

So the Swiss National Bank’s announcement that it is intervening to push down the Swiss franc sounds alarming. The speed with which the franc responded, dropping 3 per cent against the euro in a matter of minutes, also shows that if a central bank wants its currency to fall, it can deliver.

The problem is that not everyone can devalue at once . . .

Full article:

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