Recently, the overvalued US dollar has been a curse for the global economy. Central banks around the world are closely monitoring every speech by US Federal Reserve Board Chair Janet Yellen, in particular her comments on further moves in the monetary policy. Meanwhile, the US economy is getting into gear, the labor market is robust. However, global economic headwinds are casting a shadow over sustainable recovery in the US.
Western media reported central banks’ governors, namely US Fed Chair, IMF Managing Director Christine Lagarde, ECB President Mario Draghi, US Treasury Secretary Jacob Lew, governors of the Bank of Japan and the People’s Bank of China held an unofficial meeting. The only issue on the agenda was how to curb the dollar’s value. Someone might be surprised that the US official was also involved in the discussion. In fact, the US monetary authorities are interested in the weaker dollar. According to some sources, the top financial professionals reached an accord on devaluation of the US currency. If the decision could be put into practice, the devaluation of the US dollar will make a benign impact on all countries.
However, there is the second scenario. The regulators could set out their involvement in advance and coordinate their efforts. “If it happens we will see gold prices soaring. This would encourage investors to shift focus back toward gold. Gold is a rather promising asset. However, its value could surge notably to a couple thousand dollars per troy ounce. This scenario is quite realistic,” notes Nikolay Melnychuk at Laboratory of Investment Technologies.
