Publication

Currency wars are a feature of today's international financial landscape. China actively holds down the yuan's value in order to boost exports. The United States, which complains about China's exchange rate policy, can correctly claim that it does not actively manage the value of dollar. Regardless, the recent US policy mix of fiscal paralysis - and, now, fiscal contraction - and super-accommodative monetary policy has an obvious effect: the dollar has fallen sharply. Europe, big enough to defend itself, is seemingly caught in the crossfire; the euro has been appreciating sharply, something many European countries neither need nor want.