Are We on the Verge of a Currency War?
Despite global finance ministers promising in 2010 that they wouldn’t engage in “competitive devaluation,” it looks like the world is on the brink of a major currency war, or so says Alexei Ulyukayev, first deputy chairman of Russia’s central bank, according to Bloomberg.
“Japan is weakening the yen and other countries may follow,” Ulyukayev warned today at a conference in Moscow, adding later that the world is headed for a “currency war.”
Unfortunately, Ulyukayev isn’t the only one with currency concerns. Others have weighed in on the issue :
•Luxembourg Prime Minister Jean-Claude Juncker recently noted the “dangerously high” value of the euro.
•Norway and Sweden have expressed concern over currencies exchange-rates.
•The Bank of Korea has threatened “an active response” to current rates.
•Federal Reserve Bank of St. Louis President James Bullard said he’s “a little disturbed” by Japan’s actions and the risk of so-called “beggar-thy-neighbor” policies.
•Bank of England Governor Mervyn King said last week that he is worried “we’ll see the growth of actively managed exchange rates.”
In short, there’s a “degree of disquiet in the global policy-making community,” as Reserve Bank of Australia Governor Glenn Stevens puts it, and some think it could evolve into something far more dangerous for the world economy.
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