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Currency wars are debated and actions that devalue competing currencies are creating instability and volatility in the market for the global economic recovery. Many believe that the exchange rate system needs to be stabilized via a market-determined system of calculating exchange rates. One report due out this week in America that will have a trickle down effect on everything else, including currency rates, is the weekly first time jobless claims. Over this weekend’s meeting of the Group of G-20, major economies voiced their concerns that currency rates and the overall global economy will be affected by the “wall of money emanating from the U.S.” Asia, specifically, feels that the increase in greenback is causing a devaluation of their currency. Last week, a U.S. treasury official stated that pressure would be placed on Beijing during the G-20′s to allow for greater rise in the yuans value. To start this session trading week for October 25th 2010, the U.S. dollar has taken a tumble. It has fallen almost 1% against a basket of other currencies as investors feel a bit anxious about the fallout from the summit conferences. Is the stage set for an impending currency war and if so, will this volatility derail the fragile global recovery taking place? After the G-20 meeting came to a close, it was reported that there will be a refrain from competitive devaluation and disorderly movements in exchange rates. We shall see. Author: Camillo Zucari
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