October 4, 2020
- A d v e r t i s e m e n t
As Taipan more or less predicted, the global “currency wars” are now officially underway. The ultimate beneficiary of the coming turmoil will be gold.
Were governments listening in?
The theme of Taipan’s Las Vegas annual summit was “Opportunities in a Global Cash War.” On Monday – just after the conference ended – a highly placed Brazilian official echoed the exact same idea.
Said Guido Mantegna, the finance minister of Brazil:
“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness.”
As the Financial Times notes – and as we have explained many times in these pages – a weak currency lowers the cost of exports, which helps the exporting country sell more. The trouble is, not everyone can have weak paper at the same time. Currencies trade in relative terms. They are valued against one another. Dollars are always priced in yen, euros, and reals or vice versa. So if one is weak, one or more of the others must be stronger.