Courtesy of Mish.
Is the British pound overvalued? What about the Euro? The US Dollar? The Yen?
Curiously, economists make that case for all of those currencies.
And today, the IMF is pounding the drums with this proclamation “Overvalued” Pound Prevents Rebalancing.
The International Monetary Fund warned on Monday that the pound was “overvalued” and preventing the rebalancing of the economy away from a reliance on spending and imports.
In its annual assessment of the UK economy, the fund said sterling was between 5 and 10 per cent overvalued because of a “lack of competitiveness and limited export diversification”.
“Staff estimates that the current account balance is 2.6 per cent weaker than its equilibrium level, and that the real exchange rate is overvalued by about 5–10 per cent,” the IMF said.
Equilibrium Level Madness
Apparently the IMF is the arbiter of the “equilibrium level” of any and every currency. A few examples will prove the point.
New Zealand Dollar Overvalued by 20%
On April 10, 2014 the IMF warned New Zealand Dollar May Be Overvalued.
Canadian Dollar Overvalued by 10%
On March 2, 2014 the IMF Warned Canadian Dollar Overvalued by 10%” despite recent depreciation, thus the Bank of Canada should wait before hiking rates..
Australian Dollar Overvalued by 10%…
