Nov. 23 (Bloomberg) -- Financial markets are “very volatile” as nations vie to keep their currencies cheap and maintain exports, said William Rhodes, a senior adviser at Citigroup Inc.
“In a sense we are somewhat in a currency war because everyone wants to protect their currencies in the sense of revaluing too much because that cuts into their trade,” said on Bloomberg Television’s “Surveillance Midday” with Tom Keene.
Swiss National Bank President Philipp Hildebrand intervened in foreign-exchange markets by setting the maximum franc rate at 1.20 per euro in September to weaken the franc and help the exporters. World leaders meeting in the Group of 20 summit in Cannes, France, early this month vowed to “move more rapidly toward market-determined” currencies, and welcomed China’s “determination” to increase the yuan’s flexibility.
On the European debt crisis, Rhodes said the region is lacking the leadership to pull it out of the difficulties.
“Leadership is basically deciding on a plan, implementing it in a proper time frame,” Rhodes said. “Contagion is rife when you don’t do that.”
Greece is “going into their fourth year now of negative GDP. They have three years. They’re going into their fourth,” Rhodes said. “They haven’t been able to get people to support them.”
Greece has one last chance to reshape its economy and stay in the euro region, the country’s central bank said today, adding to European Union pressure on Greek political leaders to move decisively on economic revamping.
Separately, Rhodes welcomed the Federal Reserve’s stress testing of banks in the U.S., while calling such tests in Europe a “farce” and a “comedy.”
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