Tuesday, November 12, 2013

Thoughts on Currencies and the world

I own the renminbi. I also own the dollar, not because I have such confidence in the U.S., but because I've got to invest somewhere, and if turmoil comes, people will flock to the dollar. It's not a safe haven, but it's considered that way. I cannot invest the way I want the world to be; I have to invest the way the world is.

Look, the yen has declined 25% [against the dollar] in less than a year, a staggering move for one of the world's most important currencies. The euro is a fabulous concept, but its execution has been bad.

I also own the Singapore dollar because I have expenses here. Singapore has allowed its currency to appreciate as a way to attack inflation—and it's an export economy. It doesn't have cotton fields or oil or natural resources, and everything is imported.

The Chinese should learn from Singapore. There are 1.3 billion Chinese, and they would be better off if its currency went up, because the cost of living would go down. Yes, some people, like the exporters, would have to adjust. But remember, the Japanese yen has gone up a lot against the dollar over the decades, and Japan still has a trade surplus with the U.S. But China does things its own way, and I think this is one of their mistakes.

source: barrons.com