Investors have recently excited the problems of inflation in developing countries, but they gave the central bankers in Britain and the euro area safely go ahead. In connection with the growing European inflationary pressures and fears that politicians can not keep up the charts, some analysts fear that the British pound, and perhaps even the euro could soon be punished. Two forces have revived long-standing prejudices of some experts currency markets about the capacity of the central bankers in emerging markets compared to their counterparts in developed countries. The jump in food prices, oil and materials around the world, particularly in India and Indonesia, made investors worry about the fact that rising inflation will undermine the value of certain emerging market currencies.Such concerns have strengthened the currency in Europe, where investors view the threat of "stagflation" - a debilitating combination of weak growth and high inflation, which affects the United States and Britain in the 70's. Instead of punishment in Europe for emergency inflation, investors give central bankers the presumption of innocence, and expect them to raise interest rates to cool price pressures, which, they argue, is far less serious than in developing countries. Growth spurt in interest rates increases the profits of these investors on bond investments.
On Wednesday, the British pound rose to $ 1.5886 against the dollar, that some recent highs, as traders put on the fact that officials of the Bank of England, ultimately, raise the key rate of borrowing, even if the British economy shrank late last year. Euros for its part has grown by about 2% this month, despite inflation in the euro area, exceeding the target of the ECB by almost 2% last month.
Translate this page
