Currency wars: special focus
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
"[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."
Japan could realize its goal of a weaker yen without the need for FX intervention, say analysts.
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.
As global currency wars intensify, calls grow louder for China to weaken the renminbi to jump-start its sputtering export machine.
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.
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.
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 rhetoricDecember 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.
Sterling: turning JapaneseFebruary 2013
Shut up about currency wars alreadyFebruary 2013
G7 memo to Japan: don’t mention the currency warFebruary 2013
Mario Draghi: the grand old Duke of FrankfurtFebruary 2013
Further yen weakness needs action, not wordsFebruary 2013
Further euro strength could prompt ECB rate cutFebruary 2013
The joy of forex – introducing the currency sutraFebruary 2013
Europhoria takes single currency to new heightsJanuary 2013
Currency wars: a handy guideJanuary 2013
Currency wars – expect words not actionJanuary 2013
Do not expect the eurozone to wage currency warJanuary 2013
Brazil economy: is the party over?January 2013
Special focus: The future of the RMBJanuary 2013
Four things that could upset the consensus in 2013December 2012
Bearish take on the besieged Bank of JapanDecember 2012
UBS warns on euro-swiss franc floorNovember 2012
Be smart to find returns in foreign exchangeNovember 2012
HKD intervention: it could get uglyOctober 2012
US ‘uses China as scapegoat’ with currency billOctober 2011
Volumes and volatility benefit in currency warsNovember 2010