Standard Bank's Head of G10 Strategy Steve Barrow asks if G20 Finance ministers are turning a blind eye to "currency wars?
- Or are the "content with the sort of volatility we are getting, which is primarily dollar strength"
Barrows cites the big moves we have seen in the Russian rouble, Turkish lira, Swedish krona, Australian dollar &, or course, the Swiss franc
- Says that that " currency moves are a natural consequence of the monetary divergence we are seeing at the moment, where the US is set on a path of policy normalisation while much of the rest of G10, at least, is easing..and as long as dollar strength does not force some sort of wave of destructive rate hikes throughout the EM world, policymakers at the G20 level seem likely to accept higher currency volatility and, implicitly, therefore, dollar strength."
- "Japan and the euro zone, can't get enough dollar strength."
- Neither is likely to complain about volatility "as long as they have policy rates at zero, have QE turned up to the max. - and desperately need currency weakness to ease monetary conditions even further
