Currency volatile as Brisbane readies for G20 meeting

Monday, 10 November 2014  Media Alerts

"Currency fluctuations are the sort of thing the G20 might want a coordinated response on, such as a pledge to avoid an all-out 'currency war'" said Professor James Morley​ from the UNSW Business School ahead of the finance ministers' meeting of 20 largest countries in the world in Brisbane.

Professor James Morley from the UNSW Business School said "At this week's G20 meeting in Brisbane there is plenty to consider. While the US is finally exiting Quantitative Easing, Japan has just engaged in another massive round on monetary stimulus to try to avoid deflation and possibly kick start its long-struggling economy. Currency markets have been going wild in response."

The Australian dollar has recently plummeted, falling below US86c - its weakest level since July 2010. Partly this is due to the Federal Reserve officially announcing the end of its long-term asset purchase program QE3, the Bank of Japan significantly ratcheted up its own quantitative easing program

"Alas, despite the volatile state of the markets, I would not anticipate any pledge on currency stability coming out of this round of G20 meetings, nor do I think it would be a good idea," he said.

"The recovery of the US economy means that the time is right for some appreciation of the US dollar and Japan has every right to let the Yen depreciate in order to help avoid another descent into deflation. Whether it will allow Japan to fully achieve its inflation target is another question. But it will push Japanese prices in the right direction."

Professor James Morley from the UNSW Business School can comment on the G20 meetings, macroeconomics, finance, interest rates, and unemployment.

For further comment call James Morley on 02 9385 3366| james.morley@unsw.edu.au

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