Repatriation of funds will put a hole in our dollar
One of the most quoted of John Maynard Keynes’s economic maxims is that markets can remain irrational for longer than investors can remain solvent.
The original context was Keynes’s own severe financial losses incurred by margin speculation in the foreign exchange markets.
These remain the most difficult of all financial markets. That has always been the case, but their reputation for unpredictability has been further enhanced of late by the overt politicisation of exchange rates by globally significant sovereign economies.
The aim has been to boost domestic activity by making an economy’s export sector more competitive by depreciating the exchange rate.
As a country’s exchange rates can only move relative to that of another country, this has created something of a race to the bottom, provoking claims of “currency warfare”.
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