Traders are eager to see what comes out of the BRIC summit, Tuesday. Will it generate a new and powerful coalition?
Although anything is possible, it’s widely expected that the summit is unlikely to produce sweeping results because of deep differences among BRIC countries. (Remember, the BRIC nations are Brazil, Russia, India and China.)
These nations were initially linked together mostly because of their fast-developing economies. And while they share a desire to play a bigger role in creating a new global financial order their often contradictory interests would probably make forging a common policy a difficult task.
However one issue that seems likely to generate at least lot of rhetoric is the dollar as a reserve currency.
It’s widely believed Russian President Dmitry Medvedev will likely agitate for a new global reserve currency to augment the dollar.
The Russian proposal reflects both the Kremlin's push for greater international clout and a concern shared by other BRIC members that soaring U.S. budget deficits could spur inflation and weaken the dollar.
What’s the trade?
I think if you’re going to look at currencies you have to look at things on a relative basis. I’m bullish emerging market versus the dollar explains Win Thin of Brown Brothers Harriman. But I’m bullish the dollar versus the euro, he adds.
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