According to SocGen’s currency strategist Kit Juckes one main reason why Bitcoin and cryptos in general are doing so well today is because “it’s a feature of the low-inflation era that very few governments or central bankers want a strong currency.” As has been extensively observed over the past decade, “strong currencies depress inflation, at least temporarily, and if their impact on competitiveness is exaggerated, it’s still enough to make them take the blame for jobs being lost to other cheaper-currency producers.”
As Juckes then poetically summarizes, “once upon a time all this was offset by a sense that a strong currency was a sign of national virility, but such superstition is pass. It’s all about a total eclipse of the sun, today.”
Of course, the problem with no-one wanting a strong currency, “is that someone has to lose out. This year, the winner in the FX stakes, (or loser, in a topsy-turvy world where a strong currency is no kind of blessing) is the Mexican peso, reflecting two of the main underlying themes in markets: Trump deflation and the strong current of cash flowing towards emerging markets.” Meanwhile, the strength of the Zloty and Koruna “reflects the fact that the real winners from the European economic recovery aren’t in the euro area but are countries held back by European policies. SEK and NOK both still look like winners.”
So with the general U. S. population fascinated with the first full solar eclipse in 99 years…
This post was published at Zero Hedge on Aug 21, 2017.
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