| Fear has crept into the foreign exchange markets: fear of central banks. Currency traders are rapidly shifting assets to countries seen as less likely to try to weaken their currencies, amid concern that the fresh round of US monetary easing could trigger another clash in the "currency wars".
Fund managers are rethinking their portfolios in the belief that "QE3" -- the Federal Reserve's third round of quantitative easing -- will weaken the dollar and trigger sharp gains in emerging market currencies. Such moves would cause a headache for central banks worried about the domestic impact of a strengthening local currency, leading to possible intervention...............................................Full Article: Source
|