A week or so ago, maybe two weeks we posterd our thoughts on the looming cvurrency wars as the new smmot-hawley front of 2010. It seems since then that this view has gained traction and we are seeing talk of currency wars all over the place. The latest area of interest has been Brazil where the Finance Minister Guido Mantegna warned that “international currency war” has broken out, as governments around the globe compete to lower their exchange rates to boost competitiveness.".
This is a massive risk to the status quo of international trade and we posted our thoughts back in the middle of the month here. (http://spotlight-onmarketsandeconomics.blogspot.com/2010/09/currency-wars-is-protectionism-about-to.html).
The key point is that now that everyone ios doing it then by definition it must be ok, even you national duty, to do it. So watch out for Brazil to be the next cab off the rank.
Australia seems to be the only jurisdiction not concerned by its currency and not withstanding the fact that the AUD/USD is at the top of its trading channel and may pullback this alone means it stands out amongst a world where currency weakness is preferred as a buy.
Here is an article on the Brazilian question from FT Alphaville. http://ftalphaville.ft.com/blog/2010/09/28/354321/currency-wars-sound-bite-of-the-week/
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