Wednesday, September 18, 2013

No taper brings back talk of CURRENCY WAR

No taper brings back talk of CURRENCY WAR

Speculation over the onset of a global currency war first came to a head at the start of the year when dramatic falls in the Japanese yen prompted widespread criticism from other world economies, amid concerns the yen's weakness would put Japan's exporters at an unfair advantage. However, the rhetoric abated after Japan was given the go-ahead to pursue its radical policies at a G20 meeting in April.
But the Fed's decision on Thursday has reignited talk of a currency war, after thedollar index, which measures the greenback's value against other major currencies slid to levels not seen since February at 80.06 on Wednesday.
Risk-on currencies got a boost; the Australian dollar rallied above the $0.95 handle in Asia on Thursday, a high not seen since mid-June, while the sterling surged to around $1.61, its highest level since January, and the euro reached highs not seen since February of around $1.35.

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