G7 aims to ‘bolster economies, not drive down currencies’

“Finance officials from the Group of 7 pledged today not to engage in a currency war, responding to mounting pressure amid volatility in the currency markets and fears of deliberate devaluation,” Michael Babad of The Globe and Mail wrote today.

Babad continued, “The G7 finance minister and central bank chiefs said their actions on the monetary and fiscal policy fronts will be aimed at bolstering their economies, not driving down the value of their currencies. Aggressive easing measures by central banks can and have moved exchange rates, which can help economies by lowering their export prices and, thus, helping their manufacturers. What the G7 is saying is that this is a by-product, rather than a goal, on the long, hard road back to a sustained economic recovery. The Federal Reserve’s quantitative easing, for example, an asset-buying program, is negative for the U.S. dollar, but is aimed at juicing the economy, not driving down the greenback. ‘We, the G7 ministers and governors, reaffirm our longstanding commitment to market determined exchange rates and to consult close in regard to actions in foreign exchange markets,’ the group said in statements posted on individual central bank websites.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

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