Foreign exchange concerns lead investors to seek diversification
Tensions in currency markets represent collateral damage in what is primarily a credit crisis. Concerns over the Chinese renminbi, US dollar and euro are uppermost in most investors’ minds.
Daniel Murray, EFG Asset Management
We are facing a situation today in which many developed world economies are confronting the reality of a multi-year period of deleveraging. This will constrain private sector demand and dampen growth. A natural response is to seek a cheaper currency to try to stimulate foreign demand. Unfortunately it is impossible for all currencies to devalue at the same time.
The Chinese renminbi is the prime candidate against which other countries would like to devalue
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