Currency Wars: Will the dollar, euro, yen or yuan prevail in 2012? By: EW News Desk Team Date: 29 December 2011

Currency Wars: Will the dollar, euro, yen or yuan prevail in 2012?
By: EW News Desk Team Date: 29 December 2011
About The Author

EW News Desk Team

Always on the look out for the latest news to monitor the state of the world economy.

EconomyWatch, News Desk Team


*
*

*
* inShare0
* Dot Div
*

29 December 2011
The dollar has been used as the reserve currency for years. However, with the latest yen-yuan currency accord, there has been industry speculation over the future and the role of the dollar.

Following Japan and China’s currency and trade pact, several commentaries have surfaced analyzing the currency outlook for 2012.

In an editorial piece, China-Japan Currency Deal Points Way to a New World Monetary Order, Bloomberg argues that while the “immediate practical significance is limited, yet the deal signals that a deeper transformation is under way -- and one that the world should welcome.”

Related: Japan and China Agree On Currency Pact, U.S. Criticises The Currencies

In particular, the Bloomberg team holds the view that pact will help nudge the yuan towards its “inevitable status as a global reserve currency alongside the dollar, yen and euro.”

They wrote:

When the dollar loses its pre-eminence as a global currency, the U.S. will need to adjust. Dollar bills in circulation are, in effect, a gift to the U.S. -- they cost cents to print yet they buy a dollar’s worth of goods and services, a hidden form of payment that economists call seigniorage. A stronger yuan will transfer some of this seigniorage to China.

(cont.) A grown-up yuan means a more stable world economy, which would hugely benefit the U.S. In any case, China’s size and vitality assure both its geopolitical strength and the yuan’s eventual standing as a global currency. Resistance is pointless.

On the other hand, MarketWatch’s editor-in-chief, believes “2012 to be the year of the dollar,” arguing that currency wars favour the greenback.

While David Callaway doesn’t touch on the yuan and yen, he predicts the death of the euro, adding that “the idea of the euro’s emergence from the crisis as a strong reserve currency is now indefensibly out the window.”

Callaway wrote:

What we are witnessing is instead a trend shift back into U.S. dollars as investors look out on the 2012 investment horizon and see no other credible global story out there to put their money on. While the crisis in Europe and China’s slowdown might hold the U.S. economic recovery back or even pull the U.S. economy back into recession next year, the data at the moment suggest it’s the U.S. that will pull everybody out of the economic abyss this time, whenever it happens. Bullish for the dollar.

What is your currency outlook for 2012? Tell us below.

Further Reading: The Endgame For The Eurozone Has Begun: Nouriel Roubini
Sign-up for our
eNewsletter
First Name Last Name Email

We respect your privacy

Further Reading: Europe’s Currency Conundrum – What Can Save The Euro Now? : Joseph Stiglitz

Further Reading: The Almighty Dollar – Are We Entering A Post-USD World? : Sanjeev Sanyal

*
*

*
* inShare0
* Dot Div
*

Related News
Taiwan: Another Fukushima In The Making?
Taiwan Economy
Taiwan: Another Fukushima In The Making?
Date: 30 Dec 2011
Europe’s Policy Problem: Balancing Austerity With Economic Growth
World Economy
Europe’s Policy Problem: Balancing Austerity With Economic Growth
Date: 29 Dec 2011
Fix The Enterprises, Fix The Economy: Henry Mintzberg
US Economy
Fix The Enterprises, Fix The Economy: Henry Mintzberg
Date: 28 Dec 2011
A New Economic Disorder – When Old Western Powers & Emerging Markets Clash: Moha
World Economy
A New Economic Disorder – When Old Western Powers & Emerging Markets Clash: Mohamed El-Erian
Date: 27 Dec 2011
Green growth or de-growth: What is the best way to stop businesses destroying th
Industries & Business
Green growth or de-growth: What is the best way to stop businesses destroying the biosphere?
Date: 23 Dec 2011
Václav Havel: A Life in Truth : Jeffrey D. Sachs
Czech Republic Economy
Václav Havel: A Life in Truth : Jeffrey D. Sachs
Date: 22 Dec 2011

See more related news
Most Popular in Commodities and Currency

* Indian Rupee Exchange Rate: Rupees are used in a number of countries including
* Exchange Rate Forecast: Exchange rate forecasts are drawn up through the
* Foreign Exchange Rate: A foreign exchange rate, which is also called a
* Currency Symbols, Money Symbols: Currency symbols are graphical signs that
* Currency: A form of money that serves as a medium of
* UK Pound Sterling Exchange Rate: The Pound Sterling is the currency of the United

Related Links

* Currency Wars: Will the dollar, euro, yen or yuan prevail in 2012?: The dollar has been used as the reserve currency ...
* What Goes Up Must Come Down: Gold Tumbles To Lowest Level in 5 Months: After reaching new highs in 2011, the price of ...
* Switzerland Pegs Franc To The Euro : Concerned that the soaring franc would jeopardize ...
* Yuan Picking Up, Trading Near 3 Year High: China's yuan hit a fresh high against the dollar ...
* US Dollar Plunges After Major Sell-off: The U.S. dipped to its record low against the ...

Featured Sections
Commodities and Currency Commodity Trading Currency Exchange Rate Forex Forex Broker Forex Education Forex Trading International Forex Money Central Banks Companies & Investments Credit Card Guide Indian Business Management Institutes Industries & Business Personal Finance US Companies US Credit Cards US Mortgage World Economy
See more sections
DISQUS...

*
*
Disqus
o Login
o About Disqus

* Like
* Dislike
*
o

Glad you liked it. Would you like to share?

Facebook

Twitter

* Share
* No thanks

Sharing this page …

Thanks! Close
Login
Add New Comment

* Post as …
*
Image
*

Showing 0 comments

* M Subscribe by email
* S RSS

blog comments powered by Disqus
Featured Read
Can The “Wild Beast of Finance” Be Tamed?
Companies & Investments
Can The “Wild Beast of Finance” Be Tamed?
Date: 30 Nov 2011

The re-regulation of derivatives has been a subject of enormous debate. After the US government completely deregulated over-the-counter derivatives back in 1999-2000, many critics argued that the complexity and lack of transparency in the market amplified the problems of the 2008 financial crisis. However, proponents say that the flexibility of OTC derivatives provide for financial innovation and user customization. As such, should the “wild beast of finance” be tamed, and more importantly, can it even be tamed in the first place. Read more
News Desk

* Infographic: Small Businesses 2011 Report Card
* New Year Resolutions: How to Save More in 2012
* Asian-Americans Face Competition From Chinese Students For College Spots
* Samoa Skips December 30th To Align Calendar With Trading Partners
* Japanese Company Makes $130,000 Crystal Toilet To Please “God Of Toilets”
* Currency Wars: Will the dollar, euro, yen or yuan prevail in 2012?

More
Latest Slideshows

*
*
*
*
*
*
*

Africa’s Billionaires: The Top 16 Richest People On The Continent
View all slideshows
In Pictures: 12 Fastest Growing Economies for 2012
View all slideshows
Most Liveable Cities In America
View all slideshows
Hey Big Spender: Top 20 Highest Government Expenditure In The World
View all slideshows
The World’s Largest Foreign Exchange Reserves
View all slideshows
Contributors

*
*
*
*
*
*
*
*
*

David Smith

David Smith
An English journalist who, when he's not exploring the social consequences of political actions, likes to write about cricket for some light relief.

David Smith,
Investigative Journalist

* Green growth or de-growth: What is the best way to stop businesses destroying the biosphere?
* Fake Highs, Real Risks: The Dangers of “Legal” Synthetic Drugs
* Rich Nations, Poor People: The Causes For Rising Poverty In The Western World

View all contributors
Raghuram Rajan

Raghuram Rajan
Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. IMF’s Chief Economist from September 2003 to January 2007. Inaugural recipient of the Fischer Black Prize.

Raghuram Rajan,
EconomyWatch Contributor

* Citizens of Europe to Bear the Cost for Damages They Didn’t Cause: Raghuram Rajan
* Sorry “99%”, There Are No Quick Fixes For Inequality: Raghuram Rajan
* SOS – The Eurozone Can No Longer Save Themselves: Raghuram Rajan

View all contributors
George Soros

George Soros
Chairman of the Soros Fund Management. Famously known as “The man who broke the Bank of England”.

George Soros,
EconomyWatch Contributor

* Europe’s Last Hope – Will Germany Step Up? : George Soros
* The European Union’s Catalogue of Failures: George Soros

View all contributors
Christine Lagarde

Christine Lagarde
Current Managing Director of IMF. Served as France’s Minister of Finance from 2007 to 2011.

Christine Lagarde,
EconomyWatch Contributor

* Divided We Fail – The World Needs Quick And Collective Action: Christine Lagarde

View all contributors
QFinance

QFinance
The Ultimate Financial Resource. http://www.qfinance.com

QFinance,
EconomyWatch Contributor

* China’s 2012 Outlook: The Bad News about the Reserve Cut
* UK’s Alarming Apathy Towards Its Banking Sector’s Criminality
* Can The “Wild Beast of Finance” Be Tamed?

View all contributors
Kemal Derviş

Kemal Derviş
Vice President and Director of the Global Economy and Development Program at the Brookings Institution. Former Turkish Minister of State for Economic Affairs. Head of the United Nations Development Program (UNDP) from 2005-2009.

Kemal Derviş,
EconomyWatch Contributor

* Small Economies, Big Trouble: Kemal Derviş

View all contributors
OilPrice.com

OilPrice.com
The No. 1 Source For Oil Price Information

OilPrice.com,
EconomyWatch Contributor

* Taiwan: Another Fukushima In The Making?
* Iraq Desperately Seeking Investors as the US Withdraws
* Could A Gulf War III Erupt Between Iraq And Kuwait Over Oil?

View all contributors
Now On Economy Watch

* Most Popular
* New
* Updated

* Europe’s Policy Problem: Balancing Austerity With Economic Growth
* How the Rich are Spending in 2011
* The Chinese Economy
* Money Advice from The World’s Filthy Rich
* Asian-Americans Face Competition From Chinese Students For College Spots
* Seven Questions to Ask Before Refinancing Your Mortgage

All featured articles

* Taiwan: Another Fukushima In The Making?
* Infographic: Small Businesses 2011 Report Card
* New Year Resolutions: How to Save More in 2012
* Asian-Americans Face Competition From Chinese Students For College Spots
* Samoa Skips December 30th To Align Calendar With Trading Partners
* Europe’s Policy Problem: Balancing Austerity With Economic Growth

All featured articles

* Japanese Company Makes $130,000 Crystal Toilet To Please “God Of Toilets”
* Currency Wars: Will the dollar, euro, yen or yuan prevail in 2012?
* What Goes Up Must Come Down: Gold Tumbles To Lowest Level in 5 Months
* Successful Italian Bond Auction Cuts Short-Term Debt Costs By Half
* Fix The Enterprises, Fix The Economy: Henry Mintzberg
* Japan and China Agree On Currency Pact, U.S. Criticises The Currencies

All featured articles
Sign-up for our
eNewsletter
First Name Last Name Email

We respect your privacy
WORLD ECONOMY
SECTIONS:

* World Economy
* Emerging Economies
* Africa Economy
* Americas Economy
* Asia-Pacific Economy
* Europe Economy
* Economics Theories & Systems
* Economics Statistics & Indicators Database
* Economics News & Features

EDITOR'S PICK:

* The 12 Fastest Growing Economies For 2012
* Is Occupy Wall Street Bringing Back “Real” Capitalism?
* Why Inequality Will Only Lead To Our Downfall: Nouriel Roubini

INDUSTRIES & BUSINESS
SECTIONS:

* World Industries Directory
* Industry Trends
* International Organisations
* Trade Organisations
* Business Today
* Doing Business
* International Business Customs & Etiquette

EDITOR'S PICK:

* Banking’s Biggest Dilemma – Stability or Competition? : Xavier Vives
* Europe’s Old Bank Business Models Are Obsolete: Gene Frieda
* Oil Claims in South China Sea: Will International Law or Force Prevail?
* The Blame Game: If The Banks Didn’t Cause The Financial Crisis, What Did?

COMPANIES & INVESTMENTS
SECTIONS:

* Investing and Investments
* Major Companies & Stocks
* Funds & Assets
* Investment Markets
* Commodities
* Currencies

EDITOR'S PICK:

* Is Monsanto Using Us As “Human Guinea Pigs”?
* The Grand Charade Of UK’s Most Dangerous Banker
* Investing in Iraq: Ingenious or Insane?
* Takeover Turmoil: Problems Pile Up For The Bank of America
* The Secret Goldman Sachs Report: Eurozone Collapse And How To Profit From It
* Inside The Mind Of The UBS 'Rogue' Trader

PERSONAL FINANCE
SECTIONS:

* Personal Finance
* Credit Cards
* Insurance
* Banking & Finance
* Loans
* Tax
* Budgets & Budgeting

EDITOR'S PICK:

* Flat-Lining The Flat Tax: Mitchell Orenstein
* How the Rich are Spending in 2011
* Money Advice from The World’s Filthy Rich
* Seven Questions to Ask Before Refinancing Your Mortgage
* Is Corporate Regulation Protecting Consumers or Making Life Harder?
* Stock Market Mergers: Steady Marriage or Failing Long Distance Relationships?

CAREER
FINDER
SECTIONS:

* Your Career
* Search Job Listings
* Asia-Pacific Jobs
* Europe Jobs
* Middle East & Africa Jobs
* Post Your Resume
* Find International Jobs
* Search Jobs By Company

FEATURED:

* Featured Analysis
* In The News
* Slideshows
* Worldwide Consumer Confidence Index
* Econ Stats: The Economics Statistics & Indicators Database

Economy Watch
Facebook
twitter LinkedIn RSS
line