- Is the world engaged in a “currency war?”
- January’s job report had some pleasant surprises, but more progress is needed
- Purchasing managers surveys suggest growth in the US, retreat for Europe
Just over forty years ago, major economies agreed to allow exchange rates to float. This ended a long period of fixed currency values, which had been forged at the Bretton Woods conference just before the end of World War II. John Maynard Keynes was among the participants at Bretton Woods.
My fifth grade teacher had used the Bretton Woods fixings to sharpen our skill at multiplying numbers with decimals. I can still recall the conversion rate for the British currency: 2.4 dollars to the pound. Today, a pound costs $1.60. And the rate has fluctuated widely, hitting a low of $1.07 and a high of $2.60 since 1970.
Currency rates have an important influence on trade flows, as variations make one country’s goods more or less expensive to importers. The drive to export is something of an international competition, with trillions of dollars at stake. The stakes become even higher when nations are trying to work their way out of recession.
So it isn’t surprising that developments in the currency markets are getting very close attention at the moment. The euro and the yen have been at the center of that attention.
My fifth grade teacher had used the Bretton Woods fixings to sharpen our skill at multiplying numbers with decimals. I can still recall the conversion rate for the British currency: 2.4 dollars to the pound. Today, a pound costs $1.60. And the rate has fluctuated widely, hitting a low of $1.07 and a high of $2.60 since 1970.
Currency rates have an important influence on trade flows, as variations make one country’s goods more or less expensive to importers. The drive to export is something of an international competition, with trillions of dollars at stake. The stakes become even higher when nations are trying to work their way out of recession.
So it isn’t surprising that developments in the currency markets are getting very close attention at the moment. The euro and the yen have been at the center of that attention.
