All But Quiet on the Currency Front
- Nov 19, 2015
By Peter G. Hall, Vice-President and Chief Economist, Export Development Canada
Having fun yet? The global currency jolt over the past 17months is making theme parks jealous. Try as we may, we just don't seem to have the formula for ending large shifts like this. Keynes tried his best back in the 1930s. Globalization was supposed to help. Derivatives were thought to be the latest remedy. Instead, movements seem to have become more dramatic. Why are we on this wild ride, and is it about to end anytime soon?
How wild is it? Fasten your seat belts. Emerging market currencies are collectively down almost 15% over the past 17 months against the US dollar, with some fluctuating much more than others. Ah, the usual suspects; but with their structural weaknesses, doesn't this make sense? Far from it; many have learned the lessons of the past and substantially strengthened "their structural currency drivers." At the same time, many developed countries have seen deeper currency swings
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