Currencies Will Rise During Economic Contractions And Expansions

Like it or not the bailouts and massive liquidity injections, part of operation kick the can down the road, have kept this economic downturn classified as a recession rather than depression. Some still fail to realize that currencies can rise during economic contraction, i.e. the strong dollar into the 1932 economic low or strong Yen since 2007, as much as it can rise during economic expansions. No centralized operation, regardless of the size an coordination, can stop or reverse the flow of capital once in motion.

Headline: Brazil pledges to stop US 'melting the dollar'

There is widespread concern about the effects of a weaker dollar on the competitiveness of emerging markets, many of which have seen foreign investment send their currencies soaring.

"We're not going to allow our American friends to melt the dollar," said Mr Mantega, who views the US government's move to pump $600bn (£387bn) into its economy as an unfair attempt to help exports

Source: telegraph.co.uk