Timber?
http://news.ft.com/cms/s/2de6146a-4c78-11d9-835a-00000e2511c8.htmlFree-floating currencies feel pain from dollar
By Steve Johnson
Published: December 12 2004 20:11 | Last updated: December 12 2004 20:11
The pain that sharp currency movements can inflict on countries with free-floating currencies was graphically illustrated in figures last week. Australia, Canada, the UK and New Zealand have been hit by fall-out from their currencies' appreciation against the US dollar. Economists scaled down expectations of interest rate rises as a result.
Tony Norfield at ABN Amro said: "Everyone agrees the US has to adjust . . . and that will put a burden on everyone else. We have seen the first wave of that burden . . . this week."
A number of currencies are up sharply against the dollar, with the greenback weighed down by worries over the US fiscal and current account deficits and concerns that foreign central banks may diversify foreign exchange reserves out of the falling dollar.
Sterling has risen 24.1 per cent against the greenback since January 2002, with the dollars of Australia, Canada and New Zealand appreciating by 32.4, 23 and 41.1 per cent respectively. The euro has risen 33.2 per cent, threatening the eurozone's export-led recovery.
With Asian countries such as China, South Korea, India and Japan running dollar pegs or intervening to limit currency appreciation, nations with free-floating currencies have lost competitiveness against some of the world's largest exporters.
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