Currency wars knock international trade off balance

The specter of currency wars are looming as nations try to jump start their economies during a global downturn. A U.S. led international effort has been imploring the Chinese government to desist from holding the value of the yuan artificially low. To jump-start flagging economies with exports, an increasing number of nations are choosing to drain value from their currencies. As currency manipulation spreads. Article resource – Currency wars threaten to undermine global economic recovery by Personal Money Store.

Nobody wins a currency war

In eight months, the against the euro is now at a high in competition with the U.S. dollar. Also, the U.S. is pressuring China into raising its yuan which is part of the currency war. The BBC reports that although countries manipulate currencies for economic advantage, the cumulative effect undermines the global economy. Unilateral action by one central bank ignites conflict in other parts of the world. The yen became weaker in Japan on purpose. This had been done so the U.S. had cheaper Japanese goods. This led to a stronger dollar, which hurts a recovery depending on increasing exports and magnified the U.S. currency dispute with China.

Europe becomes part of U.S. dispute with Chinapan>

Congress wants to bring out the heavy artillery. Legislation was approved by the House, reports the Associated Press. This would make it so there were economic sanctions on any country manipulating currencies to get an edge on trade, like China. The U.S. wants more jobs to be created. It is going about this by trying to have the dollar fall 40 percent against the yuan in China. It is expected that the Federal Reserve will print billions of dollars in new money in order to weaken the dollar like this. European governments are getting mad since the Euro is rising due to that action since the every country has a global economy to worry about.

Why it would be bad to manipulate currencies

The currency wars should be better off after this weekend. The International Monetary Fund could be meeting in Washington to discuss it. David Sterman at Investing Answers has a different solution. He says that the world can change its consumption habits to change things. The global economy will function better if countries like China and Japan boost domestic consumption in order to lower trade supplies. This is what Sterman says. Countries like the U.S. should export more to lower trade deficits. In the next five years, President Obama plans for U.S. exports to double. He needs China, Japan and everybody else to cooperate with him to do that.

Info from

BBC

bbc.co.uk/news/business-11484532

CBS Denver

cbs4denver.com/wireappolitics/Tensions.over.currency.2.1951356.html

Investing Answers

investinganswers.com/a/currency-wars-why-these-four-countries-are-racing-bottom-1894