Coordinated intervention to halt the dollar’s relentless rally is inevitable, said Steven Barrow, head of G10 strategy at Standard Bank. This is the first time since the 1980s that there has been a coordinated intervention to curb the appreciation of the dollar.
In a report, Mr. Barrow argued that concerted action by global policymakers was “just a matter of time,” even if the U.S. and some countries strongly opposed it.
Concerns regarding the impact of a stronger dollar on the global economy are growing. An index of the dollar’s strength once morest a basket of currencies hit its highest this week since data collection began in 2005. The euro hit its lowest since 2002, the yen hit its lowest since 1998, and the pound sank to a record low.
Japan intervened last week and the Bank of England started buying long-term government bonds this week to stabilize markets.
Barrow said global action was more likely to be in the currency market than in the bond market, adding that bond purchases create inflationary pressure.
Original title:Coordinated Action to Tame Dollar a Matter of Time, Barrow Says(excerpt)