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As the US trade rhetoric swiftly develops into a trade war, devaluation of local currencies becomes a tool to make exports attractive. However, matters complicate when every competing country vies for the same share of the pie, and devalues their own currency. This is called ‘competitive devaluation’, and more dramatically, ‘currency war’.
Such competition can ruin relatively weak countries, as a weak currency means higher import costs. Debt servicing abilities of devaluing countries also get hampered with a weak currency.
In this scenario, pundits say Asian currencies would be the worst hit, as any disturbance would lead to
Such competition can ruin relatively weak countries, as a weak currency means higher import costs. Debt servicing abilities of devaluing countries also get hampered with a weak currency.
In this scenario, pundits say Asian currencies would be the worst hit, as any disturbance would lead to
