By James Dowey, Chief Economist and CIO, Neptune Investment Management
The current volatility in global markets has precisely the same cause as had the major bout of volatility last August. As the Chinese RMB is pegged to the US dollar, US monetary policy gets exported to China. This means that a strong US economy and a weak Chinese economy give rise to a tug of war at the centre of the global financial system.
However, I believe the market’s doom and gloom is over the top. This is because the policy solutions are simple, feasible and being executed by the US and Chinese authorities. They are threefold and work best in combination.
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