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While a central bank has limited options for countering downwards pressure it can always counter upwards pressure (as demonstrated by Switzerland). What currency speculators can mainly do - and profit by - is break links.

Frank Schnittger:

Remember, it is possible for a medium sized shadow bank, hedge fund or venture capitalist to totally game a small currency like the punt - and almost impossible for an Irish central bank to counter such relatively large scale manipulation

I guess I am a bit at loss here. Yes, they can decrease a currency's exchange rate. But is this something that happens? Are there any examples of how they profit from this?

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by A swedish kind of death on Tue Sep 24th, 2013 at 04:05:12 AM EST
[ Parent ]
Of course the gaming gets a lot easier if you're trying to maintain an exchange rate peg...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Sep 24th, 2013 at 05:05:39 AM EST
[ Parent ]
But then you're shooting yourself in the foot...

In the Neurozone, there can be only one.
by Migeru (migeru at eurotrib dot com) on Tue Sep 24th, 2013 at 05:10:06 AM EST
[ Parent ]
Depends on who "you" are. If "you" are the national interest, then that is perfectly true. If, however, "you" are the interests who favor making the world safe for international banking, then "you" are shooting someone else in the foot.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Sep 24th, 2013 at 05:14:03 AM EST
[ Parent ]
Currency pegs are only to the benefit of the local comprador class.

In the Neurozone, there can be only one.
by Migeru (migeru at eurotrib dot com) on Tue Sep 24th, 2013 at 04:09:21 PM EST
[ Parent ]

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