The Alchemist - Sovereign share prices set for realignment

The currency of a country is the equivalent of its share price, the perceived value of its overall tangible and intangible assets, and while the share prices of the highly indebted developed markets are faltering, those of emerging markets are rising.

In recent weeks, the dollar has benefited from its default position as the world’s safe-haven currency, but the underlying fundamentals, as most investors realise, are hardly inspiring. No-one should doubt the resolve of the US, or the eurozone, to defend their economies and currencies, but global trends are overtaking repeatedly stalled and inadequate measures to defend the euro and the dollar. The major currencies are now in trouble for all the reasons emerging-market currencies were previously in trouble. While the governments of developing countries learned the hard lessons of the...