Akio Morita, founder of Sony, argues very convincingly that freely traded currencies cause too much volatility in exchange rates for export manufacturers to consistently earn a return on investment, putting entire industries at risk. It's no coincidence that China's rise has...
What about currency speculation? The breaking of the British pound for example? Surely currencies are not volatile solely because of trade flows?
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If the central bank isn’t intruding, then it will float. When they do intrude then traders can look to force things.
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For small countries, foreign debt, oil prices, wars can do it as well.
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No they aren’t. The British wanted to help Europe unification, other reasons and fixed the pound at 2.7 marks courtesy of the Bank of England supporting it, even though it had higher inflation. Traders came in until UK let it float down naturally and BOE stopped supporting it.
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