Dear Investor
 
Last on 31st Jan, I wrote about $ is Obama’s last Priority( http://investmentacademy.wordpress.com/2010/01/31/is-obamas-last-priority/ ) and briefed on Why Obama administration will put all tools and strategies at work to ensure competitive devalued dollar?

 Today’s news confirm the intensifying currency war.

Obama’s recent comments on China:

 President Barack Obama vowed to “get much tougher” with China on trade rules, including currency rates, to ensure that U.S. goods do not face a competitive disadvantage.

 “One of the challenges that we’ve got to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and their goods are artificially deflated in price.”

 “The approach that we’re taking is to try to get much tougher about enforcement of existing rules, putting constant pressure on China and other countries to open up their markets in reciprocal ways,” Obama told a meeting with Senate Democrats on Wednesday.

Link

http://in.news.yahoo.com/137/20100204/760/twl-obama-vows-to-get-tough-with-china-o.html 

 
The undertone is very clear. Obama administration want to devalue dollar to help exporters and businesses.
 
This can happen two ways either China and others revalue their currency upwards and if they do not do so, US start devaluing dollar.
 
I believe this is just beginning, to regain the share of exports and thus reaching to previous GDP levels and thus reducing fiscal deficits is on every policy maker’s mind.
 
Rest assured this is going to intensify increasing currency volatility in 2010 to unprecedented levels.
 
Cheapening currency to survive will become mantra in 2010.
 

Regards,
Dhaval
Investment Academy | Baroda | 098255 28815
Blog: Http://investmentacademy.wordpress.com