IMF efforts to intervene in the global currency war just struck out, according to breaking news from the AP.
The annual meeting in DC ended with no compromise or resolution, only a communique that pledged to “deepen” its work in the area of currency movements, including conducting studies on the issue.
This note essentially papered-over sharp differences between China and the US, according to the AP.
Here are some of the punches thrown earlier:
- China’s Xinhua accused the US of being the currency manipulator and threatening the global recovery
- Canada’s finance minister said China’s policy was “dangerous because it leads to a crescendo of activities that are protectionist”
- And last night, Brazil’s finance minister repeated warnings of a global currency war.
What happens next? The stage is set for quantitative easing in the US; China seems likely to respond; and the rest of the world will follow along.