Roach Says BOJ, Fed Currency Weakening Won’t End in ‘Pretty Way’

Stephen Roach, a senior fellow at Yale University and former non-executive chairman for Morgan Stanley in Asia, comments on the effect of quantitative easing policies on currencies.

Roach spoke in an interview with Zeb Eckert on Bloomberg Television’s “First Up.”

“Whether it’s the Bank of Japan (8301), the Federal Reserve or even the ECB, the idea that they can engineer economic recovery by quantitative easing that may lead to weaker currencies ultimately is not a story that will end in a pretty way. Currency devaluation as a recipe for economic growth always comes at a cost of taking market share from someone else.”

“China is understandably concerned about that, as has been Brazil, as has been most major developing economies that rely on exports as a source of economic growth.”

“The developed economies say, well we’re not trying to depreciate our currencies, but they know this is going to happen.”

“This is one of the unintended and potentially dangerous consequences of the financial engineering of quantitative easing.”

To contact the reporters on this story: Rocky Swift in Tokyo at rswift5@bloomberg.net; Zeb Eckert in Hong Kong at zeckert1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.