Blog: Exchange rates
Dave Leggett | 29 March 2004
The big car firms have always been at the forefront of complaints on exchange rates. But the complaints only come when they swing in a direction that screws up profits. Otherwise, they go quiet. Take the long-simmering argument over whether or not Britain should adopt the euro currency. A couple of years ago, there was plenty of hot political debate in British industry, with Toyota complaining about the strength of the pound and vociferously speaking in favour of the single currency for Britain. Since then, the euro has appreciated by around 10% against sterling and it has gone quiet. Recent remarks by Toyota president Fujio Cho suggest that Toyota is taking a more relaxed position on the issue now and is in fact preparing to invest more in its British capacity.
Politicians can perhaps be forgiven a little cynicism the next time the moaning starts. It'll be interesting to see what Renault-Nissan says on the subject next re the 'threat' to future Sunderland investment.
Still on the subject of exchange rates, I read in my copy of The Times on a train earlier today that the Bank of Japan is ending its massive currency intervention policy (basically, buying dollars to keep their price up) which has kept the yen weak against the dollar for some time now. Apparently, the BoJ believes that the domestic Japanese economy can now withstand a stronger yen and that economic recovery is well underway. But will the dollar now start to depreciate again?
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