Some thoughts on currency

[andrewducker]

I've heard some people complaining recently about the dollar being worth so much less than it used to be, and that making our exports to the US too expensive. And that Something Should Be Done.

The bizarre thing (to me) is that these people seem to think that it's somehow something that the UK is doing that is imbalancing its trade with the US. But compare our value to the Euro and it's doing better than us (we've gone from 66c to the pound to 70c to the pound over the last year), the Brazillian Real (to pick a currency at random) is likewise up about about 20%, the Australian dollar is up about 10%, Canadia is up about 18%, etc. China's about on a par (but then their currency is fixed in various complex ways to both the euro and the dollar), and the Yen is about on a par too.

So to complain that the pound is overvalued compared to the dollar is rather silly when the pound is undervalued compared to pretty much everyone else. There's nothing that the UK can do to rebalance its weighting regarding the US without utterly destroying its trade to the rest of the planet - and as our exports are nowadays more European than US-based it would make pretty much bugger all sense to do that.

Comments

[onceupon.livejournal.com]

Oh, Andy, haven't you realized that the United States is the only place that actually EXISTS?

[chuma.livejournal.com]

Just wait until the OPEC decides that the US$ is no longer a stable enough currency to do buisness with and starts using the Euro. Economic meltdown on the horizon in the US methinks. Start saving up, people. Housing is gonna get CHEEEEEAP in the USA (and maybe even in the UK? Damn I hope so...)