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The end of Coppola's article:

Lets All Play QE

The IMF's Articles of Association explicitly rule out manipulation of exchange rates to benefit local exporters:

Each member shall:.....

(iii)avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other members;

(IMF Article IV: Obligations Regarding Exchange Arrangements)

I fail to see how a QE programme that has as its explicit objective the weakening of the currency to benefit exporters can be seen as anything other than deliberate currency manipulation in contravention of this international agreement. And I also fail to see how weakening a currency in response to QE by a major trade partner can be seen as anything other than deliberate currency manipulation, either, although it is perhaps understandable.

Why is the IMF tolerating the nascent currency wars in Europe and Asia, I want to know?

Except that the US is not weakening but tightening... The US, of course, is an importer, not an exporter.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jan 28th, 2015 at 05:57:40 AM EST
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