Mitsubishi Group – Sterling Depreciation Has Been Counter-productive…
Mitsubishi Group on why sterling’s stealth devaluation has failed to boost the United Kingdom’s exports as planned...
 Press
Release from 07/26/10 - 11:07 h: Mitsubishi Group said that the developed economies were locked in a friendly but critical race to the bottom in terms of currency valuation and warned that, unlike the US dollar, sterling is not perceived as a safe-haven by investors who flock to the US currency when selling off assets in favor of cash.
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Mitsubishi Group strategists say it is no surprise that the stealth devaluation of the pound sterling has failed to boost Britain’s exports.
“The truth is that most of Britain’s trading partners are up to exactly the same thing”, said one. The US is actively pursuing a policy of benign neglect towards the dollar in the hope that it will make the goods it produces that much cheaper and more attractive to its export markets.
Mitsubishi Group said that the developed economies were locked in a friendly but critical race to the bottom in terms of currency valuation and warned that, unlike the US dollar, sterling is not perceived as a safe-haven by investors who flock to the US currency when selling off assets in favor of cash.
The firm’s strategists agree, however, that a continuation of the trend in competitive devaluation could begin to sour international relations or lead to accusations of currency tampering that could easily derail confidence in the fragile global recovery.
Britain needs a truly major rebound in exports if it is to maintain growth when the austerity measures announced by the coalition government begin to bite later on in the year but Mitsubishi Group believes that it faces stiff competition from the US and other countries vying for a bigger slice of a steadily shrinking pie.
