The Race To The Bottom

The New Central Bank Battleground: Currencies

Developed countries relying on exports [to assist with domestic growth] wish to “talk down” [manipulate] their currencies [making their exported goods and services incrementally less expensive]. Plus, it serves to accommodate central banks’ CURRENT mandates by “theoretically” stimulating inflation.

However the big conundrum is that ALL currencies cannot concurrently be WEAK…since they trade “against” one another. At least one of the currencies must be marginally strong…and thus becomes a domestic problem for the strong currency’s homeland.

So the battle of “lowball” between the dollar, euro, pound and yen has only just begun. How do you play currency “lowball”? Central Bank chieftans will continually gripe about their domestic economies while also threatening to further devalue their monetary bases [i.e. QE4…on the docket].