The race for the strongest coin

A weak currency supports exports, while a strong currency curbs inflation. What does this mean for central banks?

Vienna. make the start Isabelle Schnabel. In February it showed – Schnabel is a member of the board of directors European Central Bank – On a graph of the extent of the decline of the euro against the US dollar. Two months later, Tiff McClem of the Bank of Canada lamented the decline of the Canadian dollar. Other central bankers followed suit. The US dollar rose, by seven percent during the year, during US Federal ReserveMarkets prepared for a fierce fight against inflation. Central bankers in other countries, also under inflationary pressure, gradually began to talk about the advantages of a stronger currency. Logic: Hard currency lowers import costs.

This type of intervention is so rare that even talking about it moves the markets. On June 16, things got more serious: Switzerland surprised markets with its first rate hike since 2007, sending the Swiss franc to a seven-year high. Hours later, she quit Bank of England He also announced a rate hike and indicated that more could follow.