"CURRENCY WARS" TO DOMINATE G20 TALKS - ANALYST
The strength of the euro and so-called "currency wars" will dominate talks at euro zone and G20 ministerial meetings this week, argues Mike Ingram from BGC.
SHOWS: LONDON, ENGLAND, UK (FEBRUARY 11, 2012) (REUTERS - ACCESS ALL)
1. BGC MARKET COMMENTATOR, MIKE INGRAM, SAYING:
"(What do you think, a more cheery affair at G20?)
Well, I think one of the things that will be raised ahead again is currency wars actually. What we saw last week was what amounted to verbal intervention by Mario Draghi on the Euro. We've had some news overnight from Mr. Kuroda, who's the Head of the Asian Development Bank and seen as a frontrunner for the new governorship of the Bank of Japan. And we saw Venezuela devalue over the weekend so I think that's certainly something which is going to move front and center once again. (How much of a threat are competitive devaluations?)
Well, it's ultimately- it leads us to a sort of beggar-thy-neighbor policy which blighted the global economy in the 1930s. There are no winners ultimately from currency wars but what we're going to see in the meantime are probably you know, a lot of appreciating emerging market currencies, people you know, flying into these high yielding FX, and you know, a lot of agitating amongst the emerging market members of the G20 in the meantime. (And State of the Union, what kind of message are we going to get from Obama, do you think?)
I suspect it'll be another sideswipe against the Republicans. I think he'll say that the economy is on the right track, it's making progress but the economy is not yet secure. Of course he can fall back really on that really rather weak Q4 GDP number and say that the last thing we need now is to drive off basically a fiscal cliff.
(QUESTION: Is Eurogroup a focus for you today?)
It will be, yes. I mean, I think the way that's unfolding is actually quite weak and quite worrying and will ultimately undermine markets going forward within Europe."
