China Is Prepared For A Currency War

Shinzo Abe told Japanese politicians in February that intervention on the markets is among the options being discussed. Photo: Bloomberg News

China 'Fully Prepared' For Currency War -- The Telegraph

China is "fully prepared" for a currency war, according to a top central banking official speaking in Beijing.

China's central bank deputy governor Yi Gang said: “China is prepared. In terms of both monetary policies and other mechanisms, China will take into full account the quantitative easing policies implemented by central banks of foreign countries.”

However, Mr Yi said a currency war can be avoided if policymakers follow the consensus reached at the Group of 20 nations meeting in Moscow last month.

A currency war occurs when a number of major economies compete against each other to devalue their own currency and lower the exchange rate. This cuts the price of exports from the country and makes imports more expensive – effectively boosting jobs as demand from both domestic and foreign markets increases.

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More News On China's Warnings of A Currency War

China well-prepared for currency war: official -- Xinhuanet
China warns US and Japan against waging a currency war -- The Australian
China "fully prepared" for currency war: banker -- France24/AFP
China Official Says Ready To Battle Weak Dollar, Euro -- Forbes
PBOC’s Yi Says China Prepared for Currency War, Xinhua Reports -- Bloomberg Businessweek

Tensions Rise In Global Currencies

Tensions Rise In Currency Wars -- Financial Times

If the world’s shell-shocked investors thought that 2011 might see an outbreak of peace in the currency wars, they were sadly mistaken. Not only did Brazil last week take more action to stem the rise in the real but Chile, one of the most free-market of emerging economies, has also unveiled a campaign of intervention against its currency.

With a sense that the battles against destabilising capital inflows are here to stay has come a determination to set new rules of engagement on controlling them. But given the uncertainty and political explosiveness around the issue, any such venture faces a tough future.

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My Comment: All artificial attempts to manipulate and regulate a currency ends in failure .... as to today's currency markets, we are starting to witness a cycle of these failures right now. Throw in a trade war .... then it becomes interesting.

The U.S. Dramatically Heats Up The Currency Wars

Fed To Spend $600 Billion More To Help Boost US Economy -- CNBC

The Federal Reserve launched a controversial new policy on Wednesday, committing to buy $600 billion more in government bonds by the middle of next year in an attempt to breathe new life into a struggling U.S. economy.

The decision, which takes the Fed into largely uncharted waters, is aimed at further lowering borrowing costs for consumers and businesses still suffering in the aftermath of the worst recession since the Great Depression.

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More News On Today's US Fed Decision

New York Fed's Statement Regarding More Purchases of Treasury Securities -- Bloomberg

Fed to buy $600 billion in bonds to aid economy -- Yahoo News/AP
Fed takes bold, risky step to bolster economy -- Yahoo News/Reuters
Fed resumes massive spending to spur recovery -- Yahoo News/AFP
Fed Will Buy $600 Billion in Debt, Hoping to Spur Growth -- New York Times
Fed to Buy $600 Billion of Treasurys -- Wall Street Journal
QE2: Fed pulls the trigger -- CNN
After the Midterms: Federal Reserve Pumps $600 Billion Into Economy -- ABC News
Fed launches new round of easing -- Financial Times
Full speed ahead -- The Economist
QE2 risks currency wars and the end of dollar hegemony -- The Telegraph
Enter QE2, followed by dollar drama and hope -- Business Times
The Global Monetary System in Crisis: The Currency War Is Leading to a Trade War -- Global Research
G-20 seeks to stop currency war -- Market Watch
What exactly is QE2? -- International Business Times
Why the Fed's Quantitative Easing Is Overblown This Time -- U.S. News And World Report
Will US printing money boost economy? -- BBC

One More Sign That The Currency Wars Are About To Heat Up

QE2 Risks Currency Wars And The End Of Dollar Hegemony -- The Telegraph

As the US Federal Reserve meets today to decide whether its next blast of quantitative easing should be $1 trillion or a more cautious $500bn, it does so knowing that China and the emerging world view the policy as an attempt to drive down the dollar.

The Fed's "QE2" risks accelerating the demise of the dollar-based currency system, perhaps leading to an unstable tripod with the euro and yuan, or a hybrid gold standard, or a multi-metal "bancor" along lines proposed by John Maynard Keynes in the 1940s.

China's commerce ministry fired an irate broadside against Washington on Monday. "The continued and drastic US dollar depreciation recently has led countries including Japan, South Korea, and Thailand to intervene in the currency market, intensifying a 'currency war'. In the mid-term, the US dollar will continue to weaken and gaming between major currencies will escalate," it said.

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My Comments: Wars and conflicts are not always measured by how many soldiers, tanks, and airplanes are used in a conflict. Money and finance can sometimes have a greater impact and cause more destruction than what bombs and bullets can sometimes achieve.

The U.S. is now positioning itself to inflate away its debt and financial liabilities, an action that will undermine everyone's currency position in global trade and employment. The impact from pursuing such an action has raised everyone's apprehension and fears that a currency war will produce the same environment that led to the Great Depression .... and they are probably right.

World Currency Wars Heats Up As U.S. Dollar Falls

Dollar Fall Sparks Stability Warnings -- Financial Times

The dollar tumbled against most major currencies on Thursday, prompting warnings that the weakness of the world’s reserve currency could destabilise the global economy and push other countries into retaliatory devaluations to underwrite their exports.

Increasing expectations the Federal Reserve will pump more money into the US economy next month under a policy known as quantitative easing sent the dollar to new lows against the Chinese renminbi, Swiss franc and Australian dollar. It dropped to a 15-year low against the yen and an eight-month low against the euro.

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More News On The World's Currency Crisis

Dollar tanks, stocks drop as Bernanke speech looms -- Yahoo News/AP
Currency war risk threatens investment recovery: U.N. -- Reuters
China's yuan hits new high at 6.6497 against U.S. dollar Friday -- Xinhuanet

Japan, South Korea are new front in currency war -- Market Watch
Japan Prime Minister Kan Says Country Will Take Action on Yen if Necessary -- Bloomberg
In Tokyo, Weak Won Worries Worsen -- Wall Street Journal
G-7, G-20 Ignores Japan’s Role in Currency War -- Dallas Blog

No Euro-Zone Currency War, Just Tough Choices on Reform -- Wall Street Journal
Russia calls for "peace", not currency wars -- Reuters

Geithner Sees ‘No Risk’ of Currency War -- Wall Street Journal
Geithner Sees "No Risk" of Currency War -- ABC News
'No risk' of currency war: Geithner -- AFP

Why Do Currency Wars Start? -- Foreign Policy
The currency war is phoney -- John Ross, The Guardian
U.S. is currency war's "tomb maker": China economist -- Reuters
How to stop a currency war -- The Economist

Are We In The middle Of A Global Currency War?

Guido Mantega, the Brazilian Finance Minister, said an international currency war threatened the country's competitiveness.

Capital Controls Eyed As Global Currency Wars Escalate -- The Telegraph

Stimulus leaking out of the West's stagnant economies is flooding into emerging markets, playing havoc with their currencies and economies.

Brazil, Mexico, Peru, Colombia, Korea, Taiwan, South Africa, Russia and even Poland are either intervening directly in the exchange markets to prevent their currencies rising too far, or examining what options they have to stem disruptive inflows.

Peter Attard Montalto from Nomura said quantitative easing by the US Federal Reserve and other central banks is incubating serious conflict. "It is forcing money into emerging market bond funds, and to a lesser extent equity funds. There has truly been a wall of money entering many countries," he said.

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More News On The Fears Of A Coming Global Currency War

Currency war fears tinge IMF meetings -- Yahoo News/Reuters
Threat of currency war highlights rates issue -- Globe And Mail
Scary Times for Currencies -- Wall Street Journal
The looming threat of currency wars -- Live Mint
Currency Wars entering the "hot" phase -- International Business Times
Currency wars -- Financial Times
We're In a Global Currency War ... But What Does It Mean? -- Global Research