Yen Intervention, the 'Grand Bargain' and Pace: Faros Trading Special Report
From October 22-23, 2010, the G20 finance ministers met in South Korea to discuss the world's imbalances in an effort to globally coordinate and unwind imbalances that resulted from the collapse of Lehman Brothers and the correlated flight to quality into the U.S. dollar. Going into the meeting the market was very aware of the 'beggar thy neighbor' policy being exercised throughout Asia and to a lesser extent Latin America; as each country sought to keep its currency weak via daily intervention.
The G-20 Finance Minister Meeting culminated with what we described as a "Grand Bargain" between the United States and China. This bargain agreed China would gradually strengthen the Yuan while stimulating domestic demand, as agreed upon in China's 5-year plan. At the same time it would allow the U.S. to lower the value of the USD over time, thus stimulating the U.S. export business and helping enable President
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