The United Nations Conference On Trade And Development has issued a new policy brief in which it blasts reinvigorated unilateral demands by assorted "economists, editorialists and politicians" who have "taken it upon themselves to "remind" the surplus countries, and in particular the country with the biggest surplus, China" that it is now their responsibility to do what it must to facilitate US exports. Instead, the UNCTAD argues that the "decision to leave currencies to the vagaries of the market will not help rebalance the global economy." It also notes that "the international community has allowed global monetary incoherence to reign before and after the crisis. Indeed, marketswere permitted to manipulate currencies in a way that made some sovereign governments and central banks look like penniless orphans. The need for a new approach to global macro-economic governance is more urgent than ever, because today's currency chaos has become a threat to international trade and could be used as an alibi by major trading countries for resorting to protectionist measures.
The UNCTAD makes it clear that China should continue doing what it is doing, as acquiescing to US extortion would risk destabilizing the world economy once again.
The UNCTAD points out that this brand new round of irrational exuberance will likely impact the economies of developing countries, whose currencies are used by carry traders across the world to hedge positions shorting low yielding currencies. (Source: Beforeitsnews.com, Mar 16, 2010).