As the dollar rose slightly against most major currencies today, another world leader has called for a return to a fixed system of currency exchange rates.
In an interview with Bloomberg yesterday, former Malaysian Prime Minister Mahathir Mohamad called the current market-based system of setting currency exchange rates "silly" and urged a return to the Bretton Woods model of fixed exchange rates that governed currency trading for 30 years.
Mohamad also had harsh words for the Federal Reserve's quantitative easing policies, saying they would force up prices in smaller countries. “When you lose money, you must accept that you have lost money,” he told Bloomberg. “When you lose money and then you go back to your house and print more money for yourself, that makes things quite ridiculous. This is money that is not real, yet this money can destabilize by, for example, going into small countries to invest in stock exchanges.”
Mohamad became a target for both international criticism and the wrath of George Soros when he instituted currency controls in 1998 to fend off an attack on the ringgit by currency traders. Yet World Bank officials have recently in essence endorsed Mohamad's position by warning that smaller countries may need to institute currency controls in order to prevent the development of asset bubbles in their economies as surplus money seeks a return.
Yen, euro, pound all down vs. dollar in today's trading
As negotiations over a shoring up of Ireland's government finances continue, the euro vs. dollar exchange rate fell back today after rising slightly yesterday, in line with a general strengthening of the dollar against other major currencies. As of 10:07 a.m., the dollar is trading at 0.737 to the euro, 0.625 to the British pound, 83.218 yen and 6.643 yuan per mid-market figures quoted on Xe.com. All figures are rounded to three decimal places.
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