Worldwide currency devaluation...

[jsc]

The recent rush to devalue across the globe can be explained by a desire for countries to keep their exports competitive. At the same time, gold has hit a record high as investors pile money into the traditional dollar hedge.

What are the likely implications over the medium to long term? Will we enter a full blown competitive devaluation environment across major economies and, if so, what impact is this likely to have on the BRIC's?

As advanced economies return to growth we must presume that investors will dump gold and return to buy the dollar etc...

Is this likely to contribute to a hyper-inflationary environment? What are the likely implications?

Your thoughts please.

 

[jsc]

No-one has any views on the unwinding of the dollar carry trade then? I thought the forex traders on the forum may provide some insight.

 

[Martinghoul]

There's no insight, just views... All these devaluations are an attempt to fix the global imbalances.

 

[Masterful]

I think QE is going to be a massive 'buy the rumour sell the news' event, the fed will likely announce $1t QE on Nov 3. We may get a quick spike down in dollar as many are exp $500bn. However I think the following months will show muted effect.

I think it is more interesting to follow the GBP, since we have a tendency to follow the fed and we don't have the extraordinary position of reserve currency to the world. If we get further QE then hyper-inflation is on the cards.