Currency wars: special focus

February 02, 2017

Call it what you will – currency war, competitive devaluation, currency manipulation, currency intervention – but central banks are knee-deep in the trenches as they battle to lower their exchange rates and boost their economies.

A post-Lehman global currency war has kicked off since 2010 and has intensified this year.

Competitive devaluation, as it is also known, involves central banks – today most prominently the Bank of Japan (yen/JPY), People's Bank of China (renminbi/RMB), Central bank of Brazil (real/BRL) and Swiss National Bank (Swiss franc/SFr) – battling it out to boost exports or bring down exchange rates to perceived fundamental value. But, with huge monetary stimulus in Europe, Japan and the US - countries that face weak domestic demand - global trade tensions have emerged at the forefront of the policymakers' concern from Washington to São Paulo.

Policy tools used for currency manipulation or intervention include direct government intervention, the imposition of capital controls and, indirectly, quantitative easing.

Recent Euromoney currency war coverage

Trump’s tax holiday proposal likely to see dollar surge, says Nomura

February 2017

"[It is clear] Trump is interested in talking the dollar down as part of a plan to reshore manufacturing, and for that he will need to have currency wars."

FX: China ponders implications for renminbi of Trump victory

November 2016

If the US did open hostilities in a currency war with China, it might fear its own economic casualties.

Don’t believe the currency-war hype on Japan

May 2016

Japan could realize its goal of a weaker yen without the need for FX intervention, say analysts.

TPP add-on aims to address Congress concerns over FX manipulation

November 2015

The Trans-Pacific Partnership (TPP) has been criticised in the US for ignoring the question of currency manipulation. The US Treasury hoped it could appease those concerns with a joint declaration by the countries involved, pledging to avoid such practices – but critics look far from convinced.

Stronger RMB, stronger China

March 2015

As global currency wars intensify, calls grow louder for China to weaken the renminbi to jump-start its sputtering export machine.

Inside investment: Hobbesian option

December 2014

A war of all against all in currency markets will not be pretty. For some countries it may also be too little, too late. The International Monetary Fund has failed in its role as the arbiter of currency values.

Dollar, as reserve currency, is a virtue, not a trap: a response to Eswar Prasad

January 2014

Forget the doom over currency wars – the dollar-led monetary system boosts global stability, while China’s fixed exchange-rate regime poses risks, argues the IIF’s Charles Collyns, a former US Treasury official, as debate rages over the role of the dollar in the emerging world, in particular.

Deflation fears to renew currency wars as ECB poised for QE, say analysts

January 2014

With global economic growth still stuttering, currency depreciation has become a zero-sum game for central banks, and recent developments in some key currencies have shown that fears of an inflation undershoot or outright deflation will remain an important driver for their currency policies.

Australia steps up the currency-war rhetoric
December 2013

Australia has stepped up its assault on a perceived overvaluation of its currency, but might well have inadvertently set up a soft floor in its currency.

Czech koruna among the most vulnerable to a dollar rebound

November 2013

Intervention threat for Australian dollar

October 2013

China sows seeds for next global downturn

September 2013

Dark clouds hover over emerging markets as US Federal Reserve spoils rates party

June 2013

Inside investment: Central banks, credit bubbles – where it stops, nobody knows
May 2013

Yen weakness only halfway through

April 2013

Ukraine: hostage to Cypriot fortune