The Trader 

Weaponising the mighty dollar

The Trader

A long time ago the US dollar was linked to the US Treasury’s gold reserves. The link came under increasing strain as inflation bit and demand for the precious metal was too much. So, on 15 August 1971 President Richard Nixon closed the gold window, severing the peg and ushering in the era of floating exchange rates. Due to a rather wobbly start to fiat money, in 1976 International Monetary Fund (IMF) member countries signed a deal ensuring “the exchange rate should be economically justified. Countries should avoid manipulating exchange rates in order to avoid the need to regulate the balance of payments or gain an unfair competitive advantage”.

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