The global currency war rages on, with China's central bank pushing the yuan to a seven-month low this week.
China's economic growth sagged to 7.4 percent in 2014, the lowest rate in 24 years, and the government hopes that a weaker currency will boost exports.
The problem, of course, is that many other nations are trying to devalue their currencies as well — for the same reason. The euro plunged to an 11-year low against the dollar Monday in the wake of last week's decision by the European Central Bank to launch a 1.1 trillion euro quantitative easing (QE) program.
And the greenback soared to a seven-year high against the yen in December amid the Bank of Japan's massive QE operation.
"These problems [of sluggish economic growth] have expressed themselves in a reliance in countries either maintaining cheap currencies or allowing them to depreciate," George Magnus, former chief economist at UBS, told
The Wall Street Journal.
"This is a phenomenon that will likely stay with us for some time."
Many experts are worried that the currency conflict will intensify. "So far it is a war, but it's being played like a chess match," Art Cashin, UBS' director of floor operations at the New York Stock Exchange, told
CNBC.
"That laid-back cerebral attitude is going to disappear. At some point somebody is going to get their currency to a place where it's going to cause enough pain to somebody else, and then it's going to turn into a real war. . . . This currency war cannot go well. They never have."
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