Currency Whiplash Ahead?
After two years of plunging equity markets and economic turmoil, the world could be headed for a prolonged period of dramatic currency gyrations. That's a big fear of many policymakers, investors, and business executives who are gathering in Davos, Switzerland, for this year's World Economic Forum. Volatile exchange rates hurt companies by making it difficult to set prices, control costs, and predict revenues. They alarm investors because they can quickly wipe out the value of their international portfolios. And they're a nightmare for monetary policymakers because they can undermine the impact of interest rate adjustments.
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