Will the Currency King Lose Its Crown?
The grand show is on. It will, perhaps, be if not 'the greatest show on earth", a fascinating face-off between the reigning king of world currencies, the US dollar, and the new-born Euro, representing some 290 million people of the European Union. Euro has already shown its economic strength on the very day of entry into the world 'ring' on the New Year's Day.
Let us try to visualise the ring where the championship bout will be held. At one 'corner' stands the reigning 'champion' for the past five decades or so, the US dollar. Flexing and flaunting its muscles to the applause of 'fans', it gives a mocking look at its rival, Euro, at the other corner. The infant challenger, cheered on by the patrons, gives back the look, fear nowhere in his eyes. (A 'proxy war' between 'Uncle Sam" and his 'distant' cousin, Europe!)
The bell rings and the first round is on. The two 'boxers' size up each other with their limbs moving almost mechanically, looking for the earliest opportunity to strike. Euro lands the first 'punch' on dollar's nose. However, dollar remains unruffled. It is a seasoned fighter. The first round ends. Euro holds a 118-100 edge over the current king. Certainly more such 'hits' and 'punches' will be traded until one bows to the other.
Euro as Global Currency
Euro has already made its presence strongly felt on debut, not only as an alternative international currency, but also as a strong contender to the 'reigning currency king'. Politicians and bankers across Europe are happy over Euro's 'first round' of brilliant success over the greenback. Markets have already welcomed it as an alternative to dollar. The German Chancellor Schroeder has expressed his confidence that Euro would 'strengthen Europe's profile' in international financial market. A Japanese Insurance Company spokesman was more direct when he said, "It is the No. 1 candidate for a global key currency, vying with the dollar," while a German banker remarked: "We had never had a better chance to form a pan-European trading platform."
In fact, the three remarks, quoted above, form the bottom-line for launching of Euro - that it would "strengthen" Europe's profile in international market; that it is the 'number one candidate' for a global key-currency; and that it offers a big opportunity to form 'a pan-European trading platform'. This is perhaps for the first time in years that Europe has stood up united to take over leadership in international currency. Since World War II, Europe has played second fiddle to America, both on economic and political counts. But birth of Euro shows that Europe has not been altogether sitting idle. It has, all that time, nurtured a dream to regain its past glory.
A New Chapter
Of course, it has taken a long time for Europe to reach its present stage, shrugging off rivalry and distrust among each other. Signs of resurrection from an age-old inertia were quite visible on certain issues that made some 'cracks' in the European-American friendship, particularly, under the NATO umbrella. Despite being close allies of America as active members of NATO, they had been bold enough to differ on issues like Bosnia, Chechnya and, last but not the least, the recent Anglo-American air-strikes on Iraq. Even when America was trying to 'force' Japan to open up its markets to US goods, European countries denounced America's 'bullying'. The recent 'banana war' between America and Europe reveals to some extent the 'bitterness' in relation between 'Uncle Sam' and its distant 'Cousin'. So what was brewing as an under-current has now finally erupted in the form of Euro, a symbol of independent thinking of Europe as a whole. The vigorous waves, initiated by Euro, have already crossed the Atlantic and the Pacific to hit the shores from America to Asia. A new chapter is in the offing in the world financial market. A new history is in the making.
Journey into an Unknown Territory
Where Japanese yen failed, Euro will probably succeed. During the 1980s and onwards many apprehended that the new economic dominance of Japan would push yen to a new status of a global reserve currency as against dollar. The 'trade-war' between mighty America and the emerging Asian tiger - Japan - seemed to imminent. Whereas the Japanese economy was booming, America's economic position steadily weakened. America lost its economic supremacy in 1986, when it became a debtor and Japan for the first time assumed the role of a creditor. America's trade deficit with Japan was on the rise. It jumped from 50 billion US dollars to 60 billion in 1993, almost half of Japan's world-wide trade balance then. America tried 'arm-twisting' policy to 'gate-crash' into Japanese markets but failed.
Soros Had a Good Day in Asia
But there were evil forces working to weaken Japan's economy and thereby cut it to its size. They succeeded in their evil designs, thanks to the 'magic wand' used by American 'financial wizard,' George Soros. He brought about devastating financial crisis, by manipulating stock markets throughout Southeast Asia. There was a tremendous 'tremor' caused by manipulation and manoeuvring by Soros, who is said to have siphoned off billions of dollars out of the troubled financial waters of Asia. Asian currencies, along with stock bourses, had a painful nose-dive. And Japan's economy and its currency, yen, received a tremendous jolt. Soros, chairman of the Soros Fund Management, was earlier reported to have suffered its biggest ever loss last year of about 82 billion US dollars because of the Russian turmoil. Perhaps he realised full 'compensation' for his big loss by manipulating Asian economic markets. What a 'genius' (may be a devil)!
The same Soros has again surfaced recently with a proposal to make the much-despised US-dominated International Monetary Fund (IMF) a central bank for the world, forecasting that a 'doomsday' is coming when "the markets can move like a wrecking ball, knocking over one economy after another."
"The swings cannot be avoided altogether," he said, "but they need to be brought under control."
What Soros is to-day forecasting as coming economic doom, "knocking over one economy after another" will perhaps be his 'repeat performance' of what he had done earlier in Asian financial markets
"The Devil can quote Scriptures for his own ends," this adage applies aptly to Soros. And only time will show whether Euro will be able to unseat the 'global king' dollar, in the midst of the world-wide speculation that dollar may be 'knocked off' its throne. But what 'game' the Soros gang plays in this 'tussle' for the 'throne' will be watched with great interests world over.
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