View more on these topics

IMF chief warns of exchange rate war

The head of the International Monetary Fund Dominique Strauss-Kahn has warned that Government’s risk a currency war if they try to use exchange rates to solve domestic problems.

Strauss-Kahn’s comments come on the back of news that the yen fell after the Bank of Japan engaged in its quantitative easing programme, which saw it cut its interest rates and propose a new fund to buy government bonds and other assets.

The yen dropped against the dollar on Tuesday after the BoJ announced the decision. Government bonds, stock and gold prices all rose on the consensus that the central banks of other leading economies would follow Japan in embarking on the latest round of quantitative easing.

Speaking to the Financial Times on Monday, Strauss-Kahn said: “There is clearly the idea beginning to circulate that currencies can be used as a policy weapon. Translated into action, such an idea would represent a very serious risk to the global recovery…Any such approach would have a negative and very damaging longer-run impact.”

The past few weeks have seen a number of leading economies take action to relieve upward pressure on their currencies. For example, Brazil recently threatened to hold down the real, and on Monday doubled a tax on foreign purchases of bonds in an attempt to reduce inflows.

Last week, Brazil’s finance minister Guido Mantega also warned of a currency war.

Strauss-Kahn said: “We have seen reports that some emerging countries whose economies face big capital inflows are saying that maybe it is time to use their currencies to try to gain an advantage, particularly on the trade side. I don’t think that is a good solution.”



Hope for the lost generation of buyers

For several years, young buyers have been set an impossible task when trying to make the arithmetic work in the housing market. In a recent survey by YouGov, over half of 20-34 year olds said the biggest factor in putting their plans to buy a property on hold was the level of deposit required by […]


Staff feel ‘railroaded’ by Co-op IFA takeover transfer

Employees of the Co-operative Bank’s IFA arm have hit out at the way the transfer to new owner Ashcourt Rowan Financial Planning has been handled. Ashcourt Rowan agreed last week to buy Co-operative Bank Independent Financial Advisers. Cifa’s 52 staff, including advisers, sales managers and support staff, were transferred to Ashcourt Rowan from October 2. […]

Nucleus in £15m issue to pay Sanlam debt

Nucleus is planning a £15m rights issue to pay back the company’s debt to South African insurer Sanlam. Founder and chief executive David Ferguson says the fund-raising has been discussed informally for the last 18 months and has secured big shareholder support. It is expected to be comp-leted by the end of the year and […]


AWD Chase de Vere challenges FOS ruling

AWD Chase de Vere is understood to be challenging a Financial Ombudsman Service ruling that it over-exposed a client to failed group Keydata, saying the FOS was not given the full facts. AWD is claiming that it advised the client not to over-expose to Keydata above its own recommended levels of roughly 10 per cent […]

Nigeria cover image - thumbnail

White paper — Nigeria International Insights

Jelf Employee Benefits closely examines healthcare provision and challenges within Nigeria. This will be of particular interest to HR decision makers with employees based in Nigeria, and assesses the environment, risks, facilities and safeguards that are relevant to organisations that are actively deploying expatriate staff in this location.


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. I dont understand currency markets although i do understand the impact on overseas investments and how this can affect an individuals investment porfolio.
    If some knowledgeable person would care to explain (in simple & broad terms) how currency can affect trade and the impact on economies between countries ie Japan mentioned above, i would be very interested to learn.

  2. Dropping interest rates makes a currency less attractive to external investors, they sell it, value falls, price of exports become cheaper. assuming demand for exports price-sensitive, exports go up in both volume and home currency terms, balance of payents improved. Home country and exports happy, other countires less so and contemplate retaliation….

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm