Fed’s move to weaken dollar "unfair"
10 Nov, 2010 14:30
As the G20 kicks off in South Korea on Thursday, the US will face tough questions over its decision to pump $600 billion into its economy – a move that economist Stephen Lewis says is “unfair to other countries.”
The measure – meant to revive the US economy – would result in the depreciation of the dollar, which looks “far too much like competitive devaluation,” and could make countries around the world resort to trade protectionism in response to the appreciation of their currencies, says Lewis, chief economist at Monument Securities.The decision is likely to face particularly sharp criticism in Seoul given America’s continued attempt to pressure China into allowing its currency to appreciate. “Americans feel that it would be a good thing for the balance of the global economy if China were to allow its currency to appreciate,” said Lewis. “But I don’t think the US is making its case any stronger through printing dollars to weaken its own currency.”Max Fraad Wolff, an economist from the New School University in New York, believes that the upcoming G20 summit in Seoul should be all about finding global ways of cooperation.“The whole point of having the G20 is to have meetings so that various world leaders can come together, can harmonize policy and people can work out deals,” he said. “Will this be a photo-op for leaders worrying about their political standing at home, or is it actually a chance for countries to come together and make sure that everyone doesn’t try to grow their economy at the cost of someone else?”