Last month, in discussing the ‘Cycle of Deflation’, the blog worried that “the risk is that we now see a round of competitive devaluations, as other countries also try to support their exports, and reduce import penetration”.
On Thursday, the Swiss National Bank announced that the Swiss franc’s strength was “inappropriate” and said it would intervene in currency markets.
Now it is not just the blog that is worried. The Financial Times comments today that, “a Swiss National Bank decision this week to weaken the Swiss franc has raised fears that other central banks will follow suit in a wave of currency devaluations”.
It is still not too late for protectionism to be avoided. The chemical industry has been a major beneficiary of globalisation and lower trade barriers over the past thirty years. Its leaders now need to speak out strongly, and in a co-coordinated way, on the subject. The upcoming NPRA meeting in San Antonio would be a good place to start.