Thursday, Aug 21, 2008
old article from 2007, not sure if anyone has seen it, but interesting stuff..
agorafinancialpublications.com: Selling Dollars, Buying Stuff
Both countries blamed the dollar-peg for promoting inflation within their borders. The Syrian inflation rate topped 10% last year, up from 7.2% in 2005. "The weaker dollar is fueling inflation," says an analyst at ING Bank in London. "We see the United Arab Emirates as the next possible shifter."
Syria's announcement merely formalizes a well-established trend, both inside its own central bank and throughout the rest of the world. Let's call that trend, "dollar aversion." In Syria, the central bank had already been purging dollars from its foreign currency reserves, replacing them with gold and euros. But with only a few billion dollars of reserves, Syria's monetary machinations will hardly dent the dollar's stature.
The same cannot be said of Syria's neighbors…
1 Comment
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1. Fjcruiser said...
Currency pegging is crazy. It is wrongly assuming that the economies of these countries=the US economy. For most countries who tried it it was shear disaster (South-East Asia, Latin America). GB' s currency was also pegged to the ERM and look what happened in 1992.
The Middle East economies are the next ones to understand that it is wrong to peg your currency to an economy which is fundamentaly different from yours whether it is US or Europe.
Mind you, the problem exist in Europe too with the Euro where it is falsely declaring that 1 euro of the richest economies is worth 1 Euro of the poorest economies. Total madness.