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Geithner Says No Risk of a Global Currency War as Global Currency War Intensifies

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Treasury chief Timothy Geithner appeared on Charlie Rose last night and was asked about his response to media reports of a coming global currency war. Geithner's response: "No risk of that."

He added that many emerging markets, other than China, were seeing major capital flows, saying: "And that's unfair to them because what's happening is, as China holds its currency down, their currencies are moving up," Geithner said. "And they're having to work very hard to make sure they're not at an unfair disadvantage with China. And that's why this issue, which people like to frame as uniquely an American preoccupation, is really much more important to the rest of the world and is really a global problem as a whole."

Still, his adamant "No risk of that" response stands in contrast to comments made by investor George Soros, who recently declared: “Whether it realizes it or not, China has emerged as a leader of the world. If it fails to live up to the responsibilities of leadership, the global currency system is liable to break down and take the global economy with it.”

IMF leader Dominique Strauss-Kahn has said that something that looks a lot like a worldwide currency war has already started: "'Currency war' might be too strong, but the fact the countries want to find domestic solutions to a global problem is really a threat to the recovery," Strauss-Kahn told the BBC.

Read a handy primer on the topic at The Week, whose editors include a nice description of why currency wars happen in the first place.

And if you missed Charlie Rose, check out the Wall Street Journal  for an overview of Geithner's responses on a range of topics.

Incidentally, the US Dollar Index today is down. .39%. Since September 1 it's down more than 7%.
POSITION:  No positions in stocks mentioned.