A new currency war?

A new currency war?

The recent decision by the Bank of Japan to increase the scope of its quantitative easing is a sign that a new round of currency war could be underway. Japan ‘s attempt to weaken the yen is a policy of unfair competition and encourages reactions in Asia and the world “. Such confidence shows Nouriel Roubini on a recent article .

This prestigious economist ensures that the central banks of China, South Korea, Taiwan, Singapore and Thailand, fearful of losing competitiveness against Japan, are easing their own monetary policies , or soon will ease more. “The European Central Bank and the central banks of Switzerland, Sweden, Norway, and some countries in Central Europe are likely to adopt quantitative easing or use other unconventional policies to prevent appreciation of their currencies , he adds.

Forex: exchange against euro

The truth is that the euro does not feel good about the threat of deflation and economic weakening  of which has warned the European Central Bank (ECB). Some experts expect the ECB to start buying sovereign debt in the first quarter of 2015 . Others go further, as Ulrich Leuchtman, currency expert at Commerzbank, for whom the ECB could purchase government bonds risk.

“The cause of the recent monetary turmoil is clear: the strong public and private deleveraging leaves monetary policy as the only tool to boost demand and growth . Deleveraging fiscal austerity, which slows growth directly and indirectly adds. The drop in public spending reduce aggregate demand while reducing transfers and tax increases reduce disposable income and thus private consumption “, diserta Roubini, for whom the heterodox Fisca policy has ended, eventually losing effectiveness. “The right policies (fiscal austerity less immediate, more public investment and less reliance on monetary easing) are exactly the opposite of what they did the major economies of the world. It is not surprising that the overall growth remaining below expectations . In a sense, today we are all Japanese , “he concludes .

To learn more, we invite you to read this post titled What’s behind the currency war that ends with the following reflection forex responsible Schroders, Clive Dennis: “Politicians are getting nervous about their survival. The fiscal and monetary options have been exploiting and tactics of beggar thy neighbor is shown as the only option available. This is causing trade wars, protectionism and currency devaluation, although nobody likes these terms. Why we called currency wars. “



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