Coordinate global exchange rates or risk stagnation | Bangkok Post: opinion

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Coordinate global exchange rates or risk stagnation

  • Published: | Viewed: 3,069 | Comments: 5
  • Newspaper section: News
  • Writer: Thomas I Palley
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The global economy needs exchange rate coordination now. Absent that, the world is likely to be increasingly afflicted by exchange rate fluctuations and policy acrimony. These are bound to undermine the economic recovery and increase the likelihood of stagnation. 

In 2010, Brazilian Finance Minister Guido Mantega warned of the possibility of ``currency wars'', as countries sought to devalue their exchange rates to gain competitive advantage.

Brazil's economy may currently be less in favour internationally, but that doesn't change the validity of Mr Mantega's concerns. In a world of demand shortage, a weaker currency can increase demand for a country's goods - and thereby help with its own economic recovery.

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