[wisconsin_cur]

$this->bbcode_second_pass_quote('', 'M')anaging directors of the International Monetary Fund are traditionally circumspect when talking about currency values. But with only a few weeks left in the job, Rodrigo Rato is unusually forthright.

“Right now the dollar is undervalued” on many measures used by the IMF to evaluate currencies, he says, though he adds that it was “certainly overvalued a few years ago”.

His remarks in an interview with the FT follow the sharp decline in the dollar against the euro and some other freely floating currencies in the aftermath of the credit squeeze and Federal Reserve interest rate cut.

Mr Rato – who hands over the leadership of the IMF to Dominique Strauss-Kahn at the end of this month – says these financial and economic developments create a “new scenario for global imbalances” that policymakers need to “keep an eye on”.

[Concerned]

$this->bbcode_second_pass_quote('wisconsin_cur', '')$this->bbcode_second_pass_quote('', 'M')anaging directors of the International Monetary Fund are traditionally circumspect when talking about currency values. But with only a few weeks left in the job, Rodrigo Rato is unusually forthright.

“Right now the dollar is undervalued” on many measures used by the IMF to evaluate currencies, he says, though he adds that it was “certainly overvalued a few years ago”.

His remarks in an interview with the FT follow the sharp decline in the dollar against the euro and some other freely floating currencies in the aftermath of the credit squeeze and Federal Reserve interest rate cut.

Mr Rato – who hands over the leadership of the IMF to Dominique Strauss-Kahn at the end of this month – says these financial and economic developments create a “new scenario for global imbalances” that policymakers need to “keep an eye on”.

[dorlomin]

Interest rates go down. The dollar goes down.

What am I missing?




The chaps bio FYI
http://en.wikipedia.org/wiki/Rodrigo_Rato

[MrBill]

I think reading the article that his comments are directed more at EUR/USD rather than the USD is under-valued against a host of other currencies, but that is my interpretation?

$this->bbcode_second_pass_quote('', 'M')r Rato clearly regards concern over the dollar-euro exchange rate as only part of a more complex global story. This also involves currencies such as China’s renminbi that are formally or informally tied to the dollar and therefore fall when it falls.

He says that, “independent of the value of the dollar”, it would be “in the interest of China” to adopt a more flexible exchange rate to help it manage its domestic economy and that this case is “becoming stronger”.

More currency flexibility from China would also help its neighbours, he says. Many emerging economies, particularly in Asia, are afraid to allow their currencies to appreciate against the dollar for fear of losing competitive advantage to China.

The outgoing IMF chief also hints at unease about Japan’s yen, which remains weak in part because of ultra-low interest rates. “Normalisation of monetary policy in Japan is an important medium-term objective.”

[Kingcoal]

Over valued compared to what, other paper currencies? I would say that gold, oil, NG, copper, etc, are undervalued. That's the real problem in my opinion. As long as the powers that be can keep those commodities artificially undervalued, the whole fiat currency game can continue. Theoretically, a house which sells today for $500K could be $2,000,000 in a couple of years. I remember houses in my neck of the woods selling for $25K and the same house now sells for $400K. It's all just paper, no scratch that, paper is to expensive for that, it's really just all bits flying around cyberspace. Sure, the rich get richer and the poor get a little poorer, but it really is only as long as oil is cheap. As we run out of oil, the game goes completely nuts; currencies become worthless very quickly.

I don't care if it's the Yen, Euros, Loonies, etc, they all depend on the status quo of cheap oil to power the machine.