Thursday, October 14, 2010

Currency Wars - A Few Contrasting Views

Is the world headed for a "currency war"? Massive capital inflows into emerging market bonds coupled with a weakening dollar has seen emerging market currencies such as the rand and real appreciate.

South Africa's Finance Minister believes a global currency war is coming, while US Treasury Secretary Tim Geithner says "there's no risk".

Brazilian Finance Minister Guido Mantega believes a "currency war is currently underway".

All of Brazil, Japan, Thailand, Switzerland and others have taken pro-active steps to intervene in their respective currency markets.

A picture paints a thousand words.