George Soros is one of the world’s most talented currency speculators, the guy who earned a $1 billion profit in 1992 when he made a huge leveraged bet that the British pound would have to exit the European Exchange Rate Mechanism (ERM) and also the man Malaysian prime minister Mahathir Mohamad had then accused of pulling down the ringgit in 1997.
So when Soros writes in the Financial Times that the euro may fall apart, it is but natural that people take him seriously. The short-term movement of currencies can be a random walk amid a lot of noise trading, but the trend over the longer term is less unpredictable.
The reverberations of the Greek debt crisis have already unsettled the euro, but what is also important is the fact that the debt and deficit levels of most euro zone countries are way out of the safe range initially agreed on in the pan-European stability pact.
The euro is in a mess, the yen is the currency of a stagnant nation and the yuan is not convertible. It seems the dollar will continue to be the preferred global currency.