Numerous central banks are pushing down their currencies in an effort to spark exports, but the dollar's recent jump will cause problems for Europe and Asia, according to The Wall Street Journal
The greenback has soared this week to a seven-year high against the yen and a two-year peak against the euro, as the U.S. economy steams along, while the economies of Japan and the eurozone suffer. China's economy also is experiencing a slowdown in growth.
The dollar's strength is helping to push commodity prices down, as many commodities are priced in dollars, including gold and oil. The Bloomberg Commodity Index has plunged 10.9 percent so far this year, to a five-year low.
That doesn't help the efforts of the European Central Bank and the Bank of Japan to boost inflation in their countries.
Whatever harm the dollar's strength is causing may well continue, some market participants say. "The conditions are in place for a multi-year rally in the dollar," Eric Stein, co-director of global fixed income for Eaton Vance Management, told The Journal.
Many experts are concerned about global currency wars. But not Ramesh Ponnuru, senior editor at the National Review.
"In the depressed conditions of recent years, expansionary monetary policies that cause currencies to devalue seem to have helped both the countries that undertook them and other countries," he writes on Bloomberg
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