Jim Rogers: Global Currency War ‘Certainly Happening’

December 15, 2014 in News by Slad

Source: Money News

Monday, 15 Dec 2014 06:30 AM

By Dan Weil

You can add star investor Jim Rogers to the list of those who see a currency war raging around the world.

Many central banks outside of the Federal Reserve, including the Bank of Japan and European Central Bank, are engaged in major easing programs to boost their economies and depress their currencies.

“Whether it’s an intentional war or an accidental war or side effect, I don’t know, but it’s certainly happening,” Rogers told Wall St. Daily. “Just look around, you see that nearly every currency in the world is down a lot against the U.S. dollar, except the Chinese renminbi.”

The dollar hit a seven-year high against the yen and a two-year high against the euro last week.

“I don’t know if somebody sat around and plotted, ‘Let’s have a currency war,'” Rogers explained. “They just said, ‘What we need to do is print a lot of money,’ without realizing it’s going to cause currency fluctuations.”

That’s pushing investors into dollars, including Rogers, despite the fact that he has “no confidence in the U.S. dollar long term.”

When it comes to stocks, with major U.S. indices hitting record highs as recently as last Friday and many foreign markets far from their all-time peaks, Rogers prefers markets overseas.

The dollar’s strength could represent a problem, says Mohamed El-Erian, chief economic adviser at Allianz.

“The problem is that exchange-rate shifts now represent the only mechanism for reconciliation, and the divide between certain market valuations and their fundamentals has become so large that prices are vulnerable to bouts of volatility,” he writes on Project Syndicate.

“As it becomes increasingly difficult for currency markets to perform the role of orderly reconcilers, friction may arise among countries.”

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Global Currency Wars | Credit: The Economist