Brief about currency wars and its impact and can a weaker currency help a nation or not

1. Currency wars

2. What is
Currency War?

3. Currency war, also known as competitive devaluation, is a
condition in international affairs where countries compete
against each other to achieve a relatively low exchange rate for
their own currency.
A currency war refers to a situation where a number of nations
seek to deliberately depreciate the value of their domestic
currencies in order to stimulate their economies.
It’s a manipulation of currency

4. Are we in Currency war?

7. •A fresh outbreak of ‘currency wars’ will significantly increase risks for
cross-border trade and investment
•The key risks will be associated with uncertainty over government
policy, currency volatility and supply chain disruption
•Countries with floating currencies are set to experience better
economic conditions than those with pegged currencies
•The incidence of trade disputes between countries is set to rise,
impacting on supply chains

8. Currency Wars:
Is a Weaker Currency Good or Bad?

9. Key Points
• Although central banks are using the available tools to fight deflation, we don't see this as a
"currency war."
• A weaker currency can help an economy by potentially boosting exports, jobs and inflation, as
well as increasing corporate earnings.
• A strong currency, such as the U.S. dollar, can cut international stock returns, so investors may
want to use exchange-traded funds (ETFs) or mutual funds that hedge currency exposure.
Why would you want a weaker currency?
Export growth. A country's exports can gain market share as its goods get cheaper relative to goods priced in
stronger currencies. The resulting increases in sales can boost economic growth and jobs, as well as increase
corporate profits for companies that do business in foreign markets.
Rising inflation. Inflation can climb when economies import goods from countries with stronger currencies, since
it takes more of a weak currency to buy the same amount of goods priced in a stronger currency
Relief for debtors. A weak currency can boost inflation, and therefore incomes and tax receipts, while the value
of debt is unchanged, making it easier for local currency borrowers to pay down debts

10. Is there Negative impacts of currency wars?

11. •Currency devaluation may lower productivity in the long-term, since
imports of capital equipment and machinery become too expensive for local
businesses. If currency depreciation is not accompanied by genuine
structural reforms, productivity will eventually suffer.
•The degree of currency depreciation may be greater than what is desired,
which may eventually cause rising inflation and capital outflows.
•A currency war may lead to greater protectionism and the erecting of
trade barriers, which would impede global trade.
•Competitive devaluation may cause an increase in currency volatility,
which in turn would lead to higher hedging costs for companies and
possibly deter foreign investment.

13. THANK YOU