Japan has already begun the resumption of dollar buying.
Now looking like QE is may be opening the door for a lot more?

Emerging Market Policymakers Vow to Combat Fed’s Easing

November 4 (Bloomberg) — Policymakers from Brazil to South Korea and China on Thursday pledged to come up with fresh measures to curb capital inflows after the U.S. Federal Reserve said it would print billions of dollars to rescue the economy.

The frosty reaction from emerging economies makes any substantive deal on global imbalances and currencies at next week’s Group of 20 meeting that Seoul is hosting even less likely.

South Korea’s Ministry of Finance and Strategy sent “a message to the markets”on Thursday saying it would “aggressively” consider controls on capital flows while Brazil’s Foreign Trade Secretary said the Fed’s move could cause “retaliatory measures.”

3 Responses

  1. Currency Wars? Is Bernanke operating independently, or is this outright triggered by Geithner’s advice to Obama?

    Little prospect for more change until the next election cycle, in 2 years!

    1. he’s pushing buttons on his pretend guns and the other side is ducking and dodging and about to fire back.

      fortunately the game is whoever exports the most wins, so it’s far better to keep losing that one.

  2. My take is that the Fed want to bail out the banks. Other considerations are secondary.

    But for currencies, their preferred scenario would be for all central banks and countries to simultaneously perform QE. They are all but begging other countries to follow their lead – clear signaling of the policy, clear signals about size, clear signals about desired outcomes. It could only be more clear if they hired a skywriter and wrote it in the sky.

    They want higher world-wide price level and asset price levels – even if they don’t have a good idea about the mechanism to get a higher price level. They think there are plenty of dollars available to spend, but nobody has inclination to spend them.

    The fed is glad these other countries are purchasing dollars.

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