Pound hits high against dollar following Bernanke vow - Business News - Business - The Independent

Pound hits high against dollar following Bernanke vow

The pound hit its highest value against the dollar since January today after the chairman of the US Federal Reserve signalled that further efforts to boost recovery were on the cards.

Delivering a speech on monetary policy in Boston, Ben Bernanke said the central bank was prepared to pump more money into the world's biggest economy to jump-start growth and fend off deflation fears.



A further programme of quantitative easing (QE) in the US would mean putting more dollars into circulation and that has depressed the greenback, leaving it at a 15-year-low against the Japanese yen.



Following Mr Bernanke's remarks, the dollar fell further against its rivals, as the pound lifted to 1.61 dollars and the euro also hit its highest level since January at 1.41 dollars.



Mr Bernanke said the Fed was currently wrestling with the size of a potential QE programme, and added: "We have much less experience in judging the economic effects of this, which makes it challenging to determine the appropriate quantity and pace of purchases."



Mr Bernanke said inflation was too low and unlikely to return to the Fed's target of just below 2% without additional help from the central bank.



He said the Federal Open Market Committee, the bank's rate-setting arm, was "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation over time to levels consistent with our mandate."



Fed policymakers are widely expected to announce a new monetary stimulus package - dubbed QE2 - at their next meeting on November 2 and 3.



The decline in the dollar's value has stoked concerns over a so-called "currency war" in which nations compete to keep their currencies from rising in value as the dollar sags.



China has come under fire in recent weeks amid accusations that it is distorting trade by keeping its currency weak to prop up exports.



Mark O'Sullivan, director of dealing with CurrenciesDirect, said a currency war could see countries revert to "1930s style protectionism" - an economic policy of restraining trade between states through methods such as tariffs on imported goods.



He said: "Countries will be forced to take measures to protect their own currency that they wouldn't usually do - like import tariffs, which would mean moving towards protected markets, rather than free markets."



Mr O'Sullivan said the devalued dollar is also leading to a hike in the price of commodities - such as wheat, gold and oil - which could mean more expensive goods for consumers. Gold, considered to be a safe-haven for investors, hit a record of 1,386 dollars an ounce, having already risen 25% this year.



He said there had to be "a realignment of currency" because if Asian countries try to artificially weaken their currencies there will be a surplus of dollars in circulation, which will "wash up" in Europe or back in the US.



Howard Wheeldon, senior strategist at BGC Partners, said it was becoming clear that the patience of US authorities was "running out" with China, which must change its stance "if it is to avoid threats of reprisal actions".



He said: "If Chinese lawmakers fail to reverse what many regard as a long policy of currency manipulation that has already seriously disadvantaged developed economies of the West through ever worsening trade deficits and corresponding devaluation of their own currencies, there could be trouble ahead."



But Robert Fogel, Nobel laureate in economics and professor at the University of Chicago's Booth School of Business, said China was unlikely to change its position.



He said: "China, one of the most protectionist countries in the world, ignores the complaints of the Americans that together its trade and currency policies are 'beggaring' its trading partners."



He added that the global currency picture also reflected high unemployment in the US, Europe and Japan, particularly in industries reliant on exports.



He said: "It's a mark of the times - eerily like the early 1930s - when virtually every country wants a higher value for the currencies of its trading partners."

News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Sport
FootballFull debuts don't come much more stylish than those on show here
News
i100
PROMOTED VIDEO
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
News
The ecological reconstruction of Ikrandraco avatar is shown in this illustration courtesy of Chuang Zhao. Scientists on September 11, 2014 announced the discovery of fossils in China of a type of flying reptile called a pterosaur that lived 120 millions years ago and so closely resembled those creatures from the 2009 film, Avatar that they named it after them.
SCIENCE
Life and Style
tech
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Matisse: The Cut-Outs exhibition attracted 562,000 visitors to the Tate Modern from April to September
art
Life and Style
Models walk the runway at the Tom Ford show during London Fashion Week Spring Summer 2015
fashionLondon Fashion Week 2014
News
Kenny G
news
News
peopleThe black actress has claimed police mistook her for a prostitute when she kissed her white husband
Life and Style
techIndian model comes with cricket scores baked in
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Training Coordinator / Resource Planner - City, London

£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week