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来源：百度文库编辑：九乡新闻网时间：2024/04/28 16:04:12

Currency wars to fade away

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2011-4-15 09:30

One by one, the countries of the emerging world are loosening the shackles with which they tried to prevent their currencies from appreciating.

It is not that they care less about export competitiveness than they did even a few weeks ago. It's that they now care more, much more, about inflation. And with rising prices of commodities, especially food and oil, stoking inflation, officials are deciding that allowing a currency to appreciate is a good way to relieve the pressure.

This modest shift over the past month deserves to be recognised by the summit of leaders of the Brics countries -- Brazil, Russia, India, China, and now South Africa -- meeting in China this week.

The latest to move is Chile, which late on Tuesday raised interest rates by 0.5 percentage points for the second month running, and signalled that they could go higher -- above the current 4.25 per cent -- in coming months. Since the move had been expected, the Chilean peso rose only marginally on Wednesday against the US dollar, but at 472.80 it now stands 3 per cent higher than a month ago and 5.5 per cent higher than on January 1.

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Earlier in the week, the South Korean authorities confirmed that they too were betting on currency appreciation to stem rising inflation (4.7 per cent in March). The central bank left interest rates unchanged, but did so only after the government eased up on earlier efforts to limit the won's rise. The South Korean currency is now at 1,085 to the US dollar, 4.5 per cent higher in a month.

Last week, in the biggest surprise of all, Brazil retreated in its gruelling fight to limit the real's appreciation. The authorities did nothing to prevent traders pushing the currency through the psychologically important R$1.60 to the dollar level, and the real now stands at R$1.58, about 6.5 per cent higher than in mid-March.

Meanwhile, even the Chinese authorities -- foot-draggers on currency appreciation in US eyes -- have allowed the renminbi to creep up by nearly 1 per cent since January 1 and 4.5 per cent since the currency peg was lifted last summer.

As Terence Lim, Korea managing director of Goldman Sachs Asset Management, says: "Everybody in the emerging markets seems to be under similar pressures. We are going through a global adjustment."

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This is not a policy revolution, but it is a significant shift. Only a few months ago emerging economies, led by Brazil, were loudly accusing the US of artificially depressing the dollar through lax monetary policies (quantitative easing) and putting unfair upward pressure on emerging market currencies.

Now, however, talk of "currency wars" has faded as policymakers focus instead on the more urgent war against inflation.

Even in Turkey, which unexpectedly cut interest rates in January to discourage currency-boosting capital inflows, the next move could be an increase ? though it almost certainly will not come before the June parliamentary election.

Of course, on its own, currency appreciation of about 5 per cent in these emerging economies cannot deal with commodity price inflation, especially as oil prices alone are up 20 per cent since 2010.

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Moreover, as the International Monetary Fund warned this week, in key emerging economies rising commodity prices are not the only driver of inflation -- they come on top of credit-fuelled domestic property booms that present serious inflationary threats.

The fund said: "The issue is whether they (leading emerging markets including China, India and Brazil) are experiencing the kind of credit boom that inevitably ends with a bust. Evidence is not reassuring in this regard."

But currency appreciation helps, particularly in those countries where long-standing export-promotion policies have kept currencies artificially low -- notably China and Korea.

Doubtless the next economic slowdown, whenever it comes, will prompt renewed pressure on policymakers to boost export-led growth and restrain currency appreciation. Nothing fundamental has changed. And, in contrast to before the 2008-09 crisis, some policymakers may be quicker to use unorthodox weapons, notably capital controls to protect currencies from excessive capital inflows. The western-led liberal consensus that taught that liberalisation was a one-way process is no longer as strong as it was.

But in the long term, currency appreciation is welcome. Alongside real economic growth, it helps the people of emerging economies close the income gap with the developed world and contributes to global rebalancing.

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