Oil Currency Hypocrisy

The internet and instant communication quickly expose inconsistent policies, even in the most technical of areas. An example of such inconsistency, according to economist Kenneth Rogoff, is US policy on currency exchange rates. The US simultaneously criticizes Asian countries for manipulating currencies, preventing them from appreciating faster against the dollar, while supporting elaborate exchange-rate dollar pegs throughout the Middle East. The US should instead support de-linking oil currencies and the dollar, Rogoff argues. “The administration’s multi-pronged effort to postpone pain to US consumers, including super easy monetary and fiscal policy, only risks a greater crisis in the not-too-distant future,” he writes for Project Syndicate. Applying a dollar-manipulation policy in the Middle East exacerbates the US deficit and regional inflation. Rogoff suggests that flexible exchange rates allow for development of a sound economic and financial base in the Middle East, along with gradual adjustments for all concerned. – YaleGlobal