Friday, Jan 23, 2009
What sterling has going for it
FT Alphaville: In defence of sterling
According to the IMF, sterling is still the third most popular global currency reserve...The point being, a sterling crash would be equivalent to Lehman times 10 as far as contagion for global markets go. It cannot just crash and disappear like Lehman - that would be in no-one’s interest...the UK government enjoys one significant benefit to say currency crisis countries like Russia and Argentina - the vast majority of its debt is denominated in GBP...The UK is among the leading exporters of manufactured goods in the world. Germany and China, of course, are way out in front. Then comes the USA, followed by Japan. But in fifth, sixth and seventh places, in a tight group, are the UK, France and Italy...
Posted by mountain goat @ 02:40 PM (649 views) Add Comment
4 Comments
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1. 51ck-6-51x said...
Nice find mountain goat - I'm not entirely sure the argument holds up though. We were number three at "end of Q3 2008" but JPY is right on our tail - so maybe no longer no three. Also the numbers show that reserves in GBP were all of 17.8% of the number two (€) and only 4.6% of the number one ($).
2. plato said...
Thank goodness someone is standing up for sterling. Good artcle MG. A pleasure to read.
I feel like saying : "Quick everyone, dump the euros before it's too late" but that would not be right.
3. str 2007 said...
One point is raised in this article to which I wasn't clear and that is most of our debt is repayable in sterling which is a good thing.
I'm still not clear though that if we have devalued first (against other currencies & gold) how do other countries devalue their currencies ?
and what against ?
4. Tennouji said...
I, too, was surprised to read that most of the UK's debt is in sterling as I keep reading that we are in double trouble
as we have so much foreign currency debt. Who to believe?