Billionaire investor George Soros said the next UK government should decide after the May 6 election whether to allow a further devaluation of the pound to rebalance the economy and assist the recovery.
Britain “has more room to use exchange rate adjustments as a way of adjusting the economy” than do nations that use the euro, he said in an interview on Friday in Cambridge, England.
NEXT GOVERNMENT
“It’s a question for the next government to decide. It has a number of options, of which a currency depreciation is one,” he said.
The pound has dropped about 25 percent on a trade-weighted basis since the start of 2007, making exporters’ goods less expensive overseas.
Bank of England policymakers are counting on the pound’s weakness to aid the recovery and rebalance the economy away from domestic spending at a time when the nation faces a record budget deficit.
“It’s a question now of, if you now cut the budget deficit and borrow less, you could probably keep the currency, raise the interest rate, you could keep the currency from going down,” he said.
“Britain, by having kept out of the euro, has that option of allowing the exchange rate to adjust,” Soros said.
Soros made US$1 billion in 1992 betting against the pound. In January of last year, a month when the pound reached as low as US$1.3506, he said that a bet on its decline “was one of the positions we carried,” though the “risk-reward was no longer clear” after it dropped below the US$1.40 level.
The pound was at US$1.5367 at the close in London on Friday.
Soros said that history shows Britain still has room to borrow more to bolster its public finances. Its debt levels have been higher, and Japan’s 10-year borrowing costs are about 1.5 percent even after its debt load swelled, he said.
“Probably Britain is not at the limit of its borrowing capacity,” he said. Still, “Britain is in a very difficult situation.”
At about 12 percent of GDP, the British deficit rivals that of Greece. Net debt climbed to 60.3 percent of GDP in February.
SERIOUS
“It has had a really serious jump in its indebtedness because its had to take over the debt of the banks that are in trouble and also the financial industry’s a very large part of the economy,” Soros said.
Soros Fund Management LLC manages about US$25 billion. The firm increased its investment in SPDR Gold Trust, the world’s largest exchange-traded fund for the metal, by 152 percent in the fourth quarter. Soros said in an interview in January that he didn’t trade himself.
Soros was attending a conference organized by the Institute for New Economic Thinking in Cambridge.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) is expected to share his views about the artificial intelligence (AI) industry’s prospects during his speech at the company’s 37th anniversary ceremony, as AI servers have become a new growth engine for the equipment manufacturing service provider. Lam’s speech is much anticipated, as Quanta has risen as one of the world’s major AI server suppliers. The company reported a 30 percent year-on-year growth in consolidated revenue to NT$1.41 trillion (US$43.35 billion) last year, thanks to fast-growing demand for servers, especially those with AI capabilities. The company told investors in November last year that
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said it plans to ship its new 1 megawatt charging systems for electric trucks and buses in the first half of next year at the earliest. The new charging piles, which deliver up to 1 megawatt of charging power, are designed for heavy-duty electric vehicles, and support a maximum current of 1,500 amperes and output of 1,250 volts, Delta said in a news release. “If everything goes smoothly, we could begin shipping those new charging systems as early as in the first half of next year,” a company official said. The new
RSS