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Market Oracle FREE Newsletter

Category: Currency War

The analysis published under this category are as follows.

Currencies

Monday, August 12, 2019

U.S. Currency Wars With China—Past And Present / Currencies / Currency War

By: Steve_H_Hanke

In a purely political move, the Trump administration (read: the U.S. Treasury) has branded China as a currency manipulator. This is an act of war. After President Trump announced that even more tariffs would be imposed on China, the markets took the value of the Chinese yuan down a notch or two. So, who was “manipulating” the yuan, Beijing or Washington? Well, it looks like Washington is engaging in yet another Asian currency war.

As it turns out, the United States has a long history of waging currency wars in Asia. We all know the sad case of Japan. The U.S. claimed that unfair Japanese trading practices were ballooning its bilateral trade deficit with Japan. To “correct” the so-called problem, the U.S. demanded that Japan adopt an ever-appreciating yen policy. The Japanese complied and the yen appreciated against the greenback from 360 in 1971 to 80 in 1995 (and 106, today). But, this didn't close the U.S. trade deficit with Japan. Indeed, Japan's contribution to the overall U.S. trade deficit reached almost 60% in 1991. And, if that wasn't enough, the yen's appreciation pushed Japan's economy into a deflationary quagmire.

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Currencies

Sunday, June 30, 2019

US Prepares for Currency War with China / Currencies / Currency War

By: Richard_Mills

The 1997 Asian Financial Crisis serves as a reminder of what happens when competing economies engage in a round of competitive currency devaluations.

The crisis began after impressive growth in the so-called tiger economies abruptly stopped, leading to stock market crashes and currencies losing about 70% of their value. The recession that followed lasted two years, during which time the IMF loaned South Korea, Indonesia and Thailand $110 billion. In exchange those countries had to adhere to strict austerity measures including higher taxes, reduced public spending, privatizations and higher interest rates, to cool their overheated economies resulting from the stimulus package. By 1999 growth returned, albeit with stock markets and currencies far below pre-1997 levels.

The currency meltdown was triggered by the default of a large property developer and a financial company in Thailand. When the Thai baht wasn’t able to maintain its peg to the US dollar, it was devalued and floated. Other Asian currencies soon followed, including the Malaysian ringgit, Indonesian rupiah and Singapore dollar.

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Currencies

Thursday, January 24, 2019

Currency War Combatant Capability Comparisons / Currencies / Currency War

By: Raymond_Matison

College football teams are broadly ranked by their strength so that a contest between teams may be both interesting to watch and be seen as fair. Accordingly, teams ranked being in Division One, only play other teams in the same division. In the Olympics, where fairness and sportsmanship are elevated, boxers, wrestlers, and weightlifters compete in their own specific weight class. It is immediately obvious that members of a lighter weight class have little chance of winning against someone in a heavier class. No such fairness or “sportsmanship” is extended in the contest over currencies.

Currency wars usually are clandestine, and information regarding their operations are usually difficult or impossible to confirm.  As a result, anyone trying analyze or get information on such activities will quickly be stymied.  However, one can infer from important market price information evidence related to currency wars.  For example, if a country’s currency declines 20% or more over a short period of time, it is reasonable that some currency manipulation has occurred, and that it is the likely cause of the decline.  A currency war is an act of war.

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Currencies

Friday, April 27, 2018

Currency Wars: The Race to the Bottom has Begun / Currencies / Currency War

By: Richard_Mills

As a general rule, the most successful man in life is the man who has the best information.
If trade wars and actual shooting wars (Syria, Yemen) weren't enough for the world economy to worry about, pressuring stock markets and threatening to derail robust global economic growth, there is another elephant in the room looking to stomp on traders, investors and everyday consumers, and that is a currency war.

What is a currency war?

A currency war is what happens when countries intentionally devalue their currencies through their central banks. Increasing the money supply lowers interest rates and the value of the currency, thereby depressing the exchange rate. The best example of this type of expansionary monetary policy is that of the United States Federal Reserve. The Fed buys Treasury notes from its member banks, giving them more money to lend. To do this, the Fed must print more US dollars. The idea is to stimulate demand by reducing lending rates and therefore entice businesses and individuals to borrow and spend more money. Until last September, when the Fed wound up its last round of quantitative easing, this policy led to rock-bottom interest rates and has been behind the record-setting highs hit on US stock markets. Low interest rates mean companies can borrow, expand and grow, thus boosting profits and share prices.

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Interest-Rates

Thursday, June 02, 2016

Race to the Bottom Gaining Traction: Negative Interest Rates Amplify Currency Wars / Interest-Rates / Currency War

By: Sol_Palha

Ability is a poor man's wealth. M. Wren

If you had told individuals before 2009 that we would be living in a negative rate environment in the near future, most would have treated you like a lunatic that just escaped from Ward 12.  Fast forward a few years and viola, bankers all over the world are embracing negative rates.  China devalued the Yuan once again, adding further fuel to the already blazing fire.  The Fed will have no option but to lower rates and then Jump onto the negative rate bandwagon. Don’t listen to the nonsense the Fed has been mouthing for months that all is well. We can already see the all is good slogan breaking down to “it’s not as good as we thought" slogan; this will eventually change to “oh my God it’s darn right ugly out there” and we need to lower rates to prevent a catastrophe slogan.  

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Currencies

Tuesday, May 03, 2016

A Currency War Battle That Europe and Japan Can’t Afford To Lose / Currencies / Currency War

By: John_Rubino

The dollar is tanking lately. From a high of around 100 in December, the dollar index — which measures USD against a basket of foreign currencies — is down about 8%, and the decline is steepening. In counterintuitive currency war terms, that means the US is winning the latest battle.

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Currencies

Wednesday, April 06, 2016

Currency Wars, The Truth About Currency Devaluation, Why They Fail / Currencies / Currency War

By: Steve_H_Hanke

In 2010, Brazil’s Finance Minister, Guido Mantega, coined the phrase “currency war” when he complained about the “cheap” Chinese renminbi (RMB). Mantega claimed this gave China an unfair trade advantage. As he put it to the Financial Times, “we’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness.”

That was then. Now the Brazilians are conspicuously silent, because the shoe is on the other foot. The Brazilian real has lost a whopping 25% against the RMB since January 2015. The currency wars continue and are every bit as intense as they were back in 2010, when Mantega coined the phrase.

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Currencies

Tuesday, March 29, 2016

Currency Wars, the Devaluation Delusion / Currencies / Currency War

By: Steve_H_Hanke

               In 2010, Brazil’s Finance Minister, Guido Mantega, coined the phrase “currency war” when he complained about the “cheap” Chinese renminbi (RMB). Mantega claimed this gave China an unfair trade advantage. As he put it to the Financial Times, “we’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness.”

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Interest-Rates

Tuesday, March 29, 2016

New Zealand’s Surprise Interest Rate Cut Highlights Concern Of A Global Currency War / Interest-Rates / Currency War

By: Nicholas_Kitonyi

On Wednesday March 9th the Reserve Bank of New Zealand announced a surprise cut in New Zealand’s benchmark interest rate by 25bps to 2.25%. That is the fifth rate cut by the RBNZ since June in the hope to spur economic growth and to boost exports by weakening the New Zealand dollar. This is a historic low for New Zealand’s interest rate.

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Interest-Rates

Monday, February 15, 2016

Devalue or Die; Negative Interest Rate Wars Have Begun / Interest-Rates / Currency War

By: Sol_Palha

Don't part with your illusions. When they are gone, you may still exist, but you have ceased to live.
Mark Twain

Tuhe “devale or die” currency wars are picking up steam; Japan’s central bankers are not alone when it comes to taking rates into negative territory. A host of European nations are now joining the bandwagon, and the latest victim is Sweden.  We alluded to this development a long time ago and published a host of articles on this topic.  Central bankers Worldwide understand that the only driving force behind the magical recovery in the U.S s hot money and that is the only weapon that can maintain that illusion. Get ready for negative rate wars; imagine having to pay the banks to keep your money; soon people will start to question the value of banks.

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Economics

Thursday, February 04, 2016

Currency Wars and a Job Gain Recession? / Economics / Currency War

By: Mike_Shedlock

I am entertaining the notion of a "Job Gain Recession".

A chart of year-over-year nonfarm employment shows that's nearly what happened in the 1970 and 1980 recessions.

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Currencies

Tuesday, February 02, 2016

Epic Currency War Battle: Hedge Funds Versus China / Currencies / Currency War

By: John_Rubino

George Soros’ successful bet against the British pound back in 1992 remains one of financial history’s epic tales.

The short version of the story begins with Britain linking its currency, the pound, to the German deutschmark via the European Exchange Rate Mechanism (ERM). But Britain’s inflation rate was higher than Germany’s, which created a growing mismatch between the currencies’ real value.

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Currencies

Tuesday, November 03, 2015

How China and the West Work Together to Manipulate the Global Currency War / Currencies / Currency War

By: MISES

Brendan Brown writes: From reading the commentaries you might have imagined that the process of a currency winning international reserve status depends on getting the IMF seal of approval. At least that seems to be the story with China.

So, strange to tell, the great international monies of the past evolved either before the IMF was created or without its help. Think of the Deutsche mark and Swiss franc — the two upstarts of the 1970s and 1980s — or briefly the Japanese yen when it enjoyed great popularity. Their emergence was due to the path of monetary stability chosen by their issuing authorities together with complete freedom from restrictions.

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Currencies

Friday, September 18, 2015

Currency Wars, Battles, And Hostile Actions / Currencies / Currency War

By: Raymond_Matison

With its recent miniscule 2% devaluation of the Yuan, media pundits noted that China had now also entered into the global currency war.  What this comment implies is that other countries with the ability to issue or print their own currency, including the U.S., have been participating in a currency war by devaluing their own currency as a hoped for means to increase their country exports and thereby stimulate their economies.  As China’s currency has been pegged to the USD, it had recently grown stronger as a byproduct of dollar’s recent dramatic strength.  Accordingly, the peg that China used to tie-in to the dollar’s value had increased the Chinese yuan to a level that was hurting their exports.  The resulting devaluation was China’s attempt to correct partially this unwelcome currency appreciation.

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Currencies

Thursday, August 27, 2015

How to Profit from China's Currency War / Currencies / Currency War

By: ...

MoneyMorning.com Peter Krauth writes: The People’s Bank of China uses its massive reserves to buy or sell the yuan to maintain a desired exchange rate. It’s been pegged to the U.S. dollar in some way for decades.

So, a strong dollar has often meant a strong yuan.

That hurts Chinese exports, and it’s been a sticking point in China’s ongoing negotiations to secure the yuan’s “reserve currency status” at the International Monetary Fund (IMF).

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Currencies

Wednesday, August 19, 2015

Asia's Whirling Dervish of Devaluations Has Encircled China's Exports / Currencies / Currency War

By: Keith_Hilden

Much digital ink has been spilled to the catalyst of China's sudden thrice devaluation of the CNY, a move trumpeted to be a unilateral action by China. It makes for good headlines, but this simply is not the case: China has been responding to stealthy and not-so-stealthy devaluation of its Asian neighbors, and is responding to these actions to maintain competitiveness of its exports. Hence a whirling dervish of devaluations has started in unlikely small countries such as Malaysia and Thailand, as well as larger economies like Japan, and China has only recently taken its place in the spiraling revelry that is set to ensue. And this has effectively economically encircled China's exports-- and the balance sheets of Chinese companies show it.

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Politics

Thursday, May 07, 2015

Financial Warfare and the Declining U.S. Dollar / Politics / Currency War

By: MISES

Ryan W. McMaken writes: With the creation of the BRICS bank and now the Asian Infrastructure Investment Bank (AIIB), the major economies of the world are hoping to lay the foundation for a multi-polar financial world beyond the unilateral control of the United States. Due to the enormous size of the US economy, coupled with the reserve status of the US dollar, the United States government has long been able to achieve strategic and military goals through flexing its financial power. This power has long allowed the US government to buy allies and friends among foreign regimes, to finance proxy wars, and to threaten the growth potential of foreign economies whenever the US government deemed it necessary.

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Currencies

Monday, March 09, 2015

Currency Wars Deepen - IMF Concedes End to U.S. Dollar Hegemony / Currencies / Currency War

By: GoldCore

- Dollar has declined as reserve currency over past decade from 70% of global reserves to 61%

- Chinese yuan is growing in stature as international currency

- IMF deputy director calls for de-dollarisation in emerging markets

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Currencies

Thursday, February 26, 2015

Currency Wars, Again / Currencies / Currency War

By: Steve_H_Hanke

The specter of currency wars rises like a phoenix once again. This time around, most of the warriors reside in Washington, D.C.. The strong dollar has inflamed the currency warriors (read: mercantilists) led by Democratic Senator Chuck Schumer from New York and Lindsey Graham, a Republican Senator from South Carolina. These mercantilists argue that “cheap” foreign currencies give the U.S.’s trading partners an “unfair” advantage, something worth doing battle over.

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Currencies

Tuesday, February 17, 2015

Currency War Expands to New Fronts / Currencies / Currency War

By: EWI

Editor's note: This article was adapted, with permission, from the February issue of The Elliott Wave Financial Forecast, a publication of Elliott Wave International. All data is as of Jan. 30, 2015. Click here to read the complete version of the article, including specific near-term forecasts, for free.

The "Currency War" we discussed in our October issue of The Elliott Wave Financial Forecast and again in the January issue has expanded to new fronts, as world central banks fought to remain economically competitive by trying to push down the value of their currencies.

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