The title of Chris Dillow’s latest piece – ‘No need to fret about weak sterling’ – makes me wonder about the language we use to describe currency levels.
Somebody, long ago, pulled a brilliant verbal trick in getting us all to talk about the pound being ‘weak’ or ‘strong’ – after all, who wants to be weak? This language encourages us to think of the currency as a virility symbol for the national economy. Likewise the day-to-day movements: ‘sterling gained one cent against the dollar but lost two cents against the euro’ – it makes it sound like football scores. Woo-hoo, we’re up! In your face, dollar!
If we changed strong and weak to high and low, and changed gain and lose to rise and fall, it would sweep away a little of the ‘strong-currency’ fetishism. That attitude may be a fair response to competitive devaluations that encourage a burst of growth at the expense of higher inflation, but it can’t be a universal principle.
Sometimes a lower currency will help the economy, sometimes a higher one will – although, given the trade-offs involved, the notion of a ‘correct’ exchange rate (even at any one time) is pretty shaky.