by Arthur Foxake
Economic war for The Petrodollar (image source)
Last week, in the global currency war’s latest escalation, Kazakhstan instituted a free float for local currency the Tenge. The currency immediately plunged by some 25%.
The thinking behind the move was straighhtforward enough. Collapsing crude oil prices along with the relative weakness of the Russian rouble (which is not a currency officially traded on world markets, but is important to former Soviert Union states, had severely damaged Kazakhstan's economy, and Khazakstan is central Asia’s largest crude exporter. A chart of the tenge’s effective exchange rate clearly shows how the pressure for devaluation had been mounting for quite a while. When China devalued the yuan earlier last month, the outlook for the Khazakstan economy deteriorated even further.
What might not be quite so clear is how recent events in developing world Foreign Exchange markets following China's move to cancel out the effects of falling demand in the west for its exports stem from a seismic shift we became aware of late last year - namely, the death of the petrodollar system which has served to underwrite decades of dollar dominance and was, until recently, a fixture of the post-war global economic order.
It is all part of the third world war, which in spite of United States military provocation, Russia, China and their allies have chosen to wage against US economic domination by undermining and eventually replacing the Petrodollar as the currency for international trade.
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