The strong dollar surprise?


The dollar is falling. Everyone knows it needs to fall even further. But there are worries that it could suffer a sudden plunge when currency traders realize it’s not falling fast enough. In a comment in the FT, Jeffrey Garten says betting on a weaker dollar is “nearly a risk-free proposition.” And that makes him unhappy:

At an opportune moment, they [central bankers] could make a sharp and powerful co-ordinated intervention in the currency markets to buy dollars. This surprise move would not change long-term trends, but it would show speculators that shorting the dollar is not always without consequence. The intervention could therefore bolster prospects for an orderly dollar decline and demonstrate that the US and the European Union are capable of jointly using powerful policy levers.

What? How would that help?