Re: What does it mean by "forced to devalue the pound"?
- From: "Mica" <mangelopoulos@xxxxxxxxxxx>
- Date: Tue, 24 Jul 2007 10:21:57 +0300
? "DarkProtoman" <Protoman2050@xxxxxxxxx> ?????? ??? ??????
news:1185250129.925925.246700@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
When George Soros 'broke the Bank of England", they say the BoE was
"forced to devalue the pound"? Huh? Didn't the forex market already do
that? By the GBP/USD rate rising? Please explain.
On September 6, 1992 Soros made a US 1 billion by short selling the British
pound. England by that time was part of the so called European Exchange
Rate Mechanism which monitored exchange rates of it' s members so as to
achieve a financial stability over currency markets but also, as a result,
to secure confidence to other non financial markets as well.
This system is called "dirty float". This means that currencies and
exchange rates can float only within a predefined + or - region of almost
15%, if I am right. Pound had to be depreciated to reflect the relational
image of the British economy compared to other economies of the mechanism's
currency basket but England resisted that. Soros did what all contemporary
fund managers do every day. "The trend is your friend" they say. They
identify a market moving force and they invest heavily driving that force to
emerge full speed attracting more and more power eventually creating a
bubble loop which will make the market crash. [ ...England at the end had
to devalue to avoid the worse... ] If traders have inside information so as
not to take any chance the better.
Soros is a parent and child of the newborn financial markets and not much of
an economist in my view. He is an artisan and not an artist. He made
himself much more useful to the society in the late days by donating
billions of dollars to various causes trough the Soros Foundation.
.
- References:
- What does it mean by "forced to devalue the pound"?
- From: DarkProtoman
- What does it mean by "forced to devalue the pound"?
- Prev by Date: What does it mean by "forced to devalue the pound"?
- Next by Date: density of the ratio of levy variables
- Previous by thread: What does it mean by "forced to devalue the pound"?
- Next by thread: density of the ratio of levy variables
- Index(es):
Relevant Pages
|
