Battle of the Currencies

Battle of the Currencies

Battle of the Currencies

Although it may sound a bit strange, some countries are deliberately devaluing their currencies. This kind of intervention is mainly used during times of recession in order to bring a competitive edge through lower priced goods and services to boost economic activity. The counter reaction to currency devaluation by one country generally initiates other countries to follow that path in order to maintain advantages. This situation is called “Currency Wars”. 

When the economy is expanding, countries often prefer to keep their currencies strong so that their citizens will be able to purchase more, and by doing so, decrease any threat of inflation.

So, if a strong currency causes citizens to buy more and keeps inflation away, what are a weak currency's benefits? Well, when a country keeps its currency low it can affect the levels of export by lowering the price of goods and services to a more attractive level. That is why people buy low priced products from China, because China keeps its currency valuation relatively low. This is actually a very smart move as they can sell more goods at a very attractive price to other countries, which means more jobs and a greater economic growth. 

This situation may sound idyllic but there are a lot of problems that can happen as a result from these currency wars.  When many countries are in this “war” and everyone is trying to devaluate their currencies at the same time, it can potentially cause market instability. This situation is extremely unhealthy for the market as it can deter people from investing and trading. That, in turn, can interfere with the market growth negatively rather than the anticipated positive outcome. 


What do you know about the market?

Learn more from our educational pack

and start trading here


Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Recent .

Dogecoin is going to the moon… literally!

Dogecoin is going to the moon… literally!  While the cryptocurrency markets have been put through the mill the past few weeks, Dogecoin managed to steal the spotlight …

Read More →
Stock of the Week: Apple in huge demand, beats estimates by billions.

Stock of the Week: Apple in huge demand, beats estimates by billions. Apple beat estimates for quarterly earnings by billions of dollars. We look at …

Read More →
Stock of the week: Facebook makes CEO Mark Zuckerberg $8 billion in just one week!  

Stock of the week: Facebook makes CEO Mark Zuckerberg $8 billion in just one week!   It has been a momentous week for Facebook CEO Mark Zuckerberg who …

Read More →
Big Tech earnings roll in – Huge profits for Google, Microsoft and more! 

Huge profits for Google, Microsoft and more! Major big tech companies have released their quarterly earnings. We look at how some of the world’s biggest businesses performed so far this year!     Google, …

Read More →
MetaTrader 4 vs MetaTrader 5 – which is the better platform?
Bitcoin bounces back: Is buying the dip worth the risk?

Bitcoin bounces back: Is buying the dip worth the risk?  Bitcoin has recovered some of its losses following its fall from a record high of $65,000. Considering the crypto king’s astonishing performance in 2021, should …

Read More →
Oil summit: Waste of time
Oil market outlook: bumpy ride ahead?

2020 has been disastrous for the oil markets, however, it appears that oil has recovered most of its losses and is now hovering near pre-pandemic levels. In today’s article we will take a look at oil’s recent performance and explore the opportunities that may lie ahead.

Read More →