SINKING might be a better description than floating when it comes to many of the world’s currencies. A plunge in commodity prices has hit producers of natural resources hard. The weak oil price, in particular, has undermined the current-account position of oil exporters. The Economist Intelligence Unit (EIU), our sister company, expects the Norwegian current account to have deteriorated by 3.3 percentage points between 2013 and 2015. Many currencies have followed the oil price down. Since June 2014, the Norwegian krone has declined by 26%, the Brazilian real by 40% and the Russian rouble by 45% against the greenback (see chart).
Those who believe that competitive exchange rates boost economic growth should be pleased. But not every country is willing to let its currency freely adjust. The IMF’s annual review of currency regimes, published this month, revealed that at the beginning of 2015 only 35% of member countries let their currencies float, and only 16% intervened rarely enough for the IMF to classify them as “free floating”. The rest, from Hong Kong’s iron-clad peg to the dollar to the stumbling Nigerian naira, are...Continue reading
from Economics http://ift.tt/1VUsGtL
via IFTTT
No comments:
Post a Comment