Hello … We’re Over Here!
We Europeans are having it especially tough. Not only have most European currencies soared against the Japanese Yen, squeezing the competitiveness of our already frail manufacturing businesses, but no one else seems to be listening to our pleas. It’s a bit like being stuck in the corner of a Hollywood drinks party. You’re busting to say something, but Tom Cruise, Angelina Jolie and Scarlett Johansson keep turning their backs. And Hank Paulson, Ben Bernanke and Alan Greenspan have already cornered the canapés and are on the other side of the room, laughing and joking with Zhou Xiaochuan and Jin Renqing of China, and Japan’s Koji Omi and Toshihiko Fukui – Asia’s key Finance Ministers and Central Bankers.
Is a US/Asian currency deal being stitched together ?
(...) Thus, the creation of an ‘Asian Dollar’ would polarise the World economy into two rival groupings: (1) a broad US dollar bloc comprising the US, the key oil producers, Latin America, China, India and most Asian emerging economies; and (2) a Euro bloc consisting of the existing Euro members, plus Switzerland, Russia, the geographical fringe of Europe and probably most of Africa.
This arrangement need not be de jure, only de facto. However, a key question regards what happens to the two main alternative currencies: the Japanese Yen and British pound? Logically, they should join with their respective geographic and trade partners. Thus, the Yen should join the US dollar bloc and sterling should team up with the Euro bloc, but at what rate?
Link to CrossBorder Capital's website
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