Is this finally the start of global currency rebalancing?

CURRENCIES

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Jerome Booth, head of research at Ashmore Investment Management, explains why currency rebalancing is fast becoming the new reality.

At the Bretton Woods Conference in 1944 it was agreed the dollar would be convertible to gold at $35 an ounce and other currencies pegged to the dollar. The system started to come under pressure from the London gold market and intervention to counter this took the form of the ’Gold Pool’, whereby the surplus central banks in Europe agreed to sell gold to support the dollar. In 1971 the last straw came when US Treasury secretary John Connally bluntly stated on a trip to Europe that the dollar was “our currency, but your problem”. European central banks consequently asked for their gold...

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