The Financial Times. One of the world’s better financial newspapers and websites, and FT Alphaville, one of my regular reads for financial news. Kudos to all there at the FT, your efforts are appreciated by this blogger.
But, in the interests of letting the FT know that articles are read critically, check out this post in FT Alphaville:
25 interventions in a one week band, redux
Bit of background before you read this article … a current meme doing the ‘headless chook’ rounds of the bears is that there is currency war going on out there, with many countries competitively devaluing or depreciating their currencies. Which is going to lead to massive instability in global FX rates and is going to leak into equity markets and cause equity markets to enter a new bear phase … and it is time to buy baked beans and shotguns, you know, the normal tin-hat drill.
If you don’t know what I am talking about then the rest of this post isn’t going to make much sense.
So, the FTA article, and what I reckon is a pretty poor piece of journalism.
In the list of ‘interventions’ (the FTA definition of intervention is pretty loose, but I am prepared to grant them this, intervention can be achieved by jawboning) which aim to weaken local currencies against other currencies is one from the Reserve Bank of Australia. Have a read of it, excerpt below:
This is the article the FTA links to: http://www.fxstreet.com/news/forex-news/article.aspx?storyid=98e6f692-fe50-41c0-90f2-491d04dbb396
This is the pertinent information, my bolding:
Aussie has bounced up, to appreciate against its major rivals on the back of rumours of the Reserve Bank of Australia “checking FX rates”, which seems to have triggered short covering on AUD crosses.
There are, IMO, two problems with including this in a list of countries intervening to weaken their currency.
Problem 1, the article is from May 21. Hello? This ‘currency war’ tin-hat meme gained notoriety in very late September, May is ancient history in the FX market.
Problem2 (and h/t to Blind Freddy for pointing this out, between fits of laughter), and this is incredible, this RBA ‘intervention’ was aimed at strengthening the AUD against the USD, not weakening it, which goes against the whole thrust of the ‘currency war’ meme.
To the FT & FT Alphaville, once again this blogger appreciates your work, but this piece is pretty poor.
I am working myself up into a lather. The FT lists interventions to lower the value of the Egyptian Pound and the Ukrainian Hryvnia, amongst others. Dudes, with all due respect, who gives a rat’s?
China’s foreign-exchange reserves, the world’s largest, surged by a record to $2.65 trillion at the end of September, adding fuel to complaints that the nation’s curbs on gains in the yuan are undermining the global recovery.
This is THE currency war, its been going on for years and will continue to do so.
This post is turning into a China currency policy rant.
Great article in the FT about the real currency war.
China must fix the global currency crisis
By George Soros