The US dollar has been sold across the board today as the G20 meeting over the weekend came to the agreement to shun competitive currency devaluation.
At the meeting in South Korea (nicely timed for corporate hospitality at the grand prix), a surprise deal was struck to give emerging nations a bigger voice in the IMF, recognising the power shift away from the traditional West. This recognition of a new ‘world order’ could be exacerbated by the dichotomy of what will happen over the next twelve months. As stated before, it is the developing nations of the East and South America that will be the driving engines to pull the world economy through these dark days. Whereas, the established West (US, EU and UK) languishes in their own self-pity and inability to compete. Action needs to be taken, but will extra monetary stimulus be enough to answer the West’s prayers? Governments need to help prop up private enterprise, after all it is these companies and their employees that pay the taxes.
In other news, sterling has hit a 7 month low against the euro today on concerns that the Bank of England may be veering towards more monetary easing to revive the flagging economy. However, if the rate of inflation stay at 3% or higher, can Mervyn and the boys really ‘print’ more money and artificially inflate the economy?
