The BBC’s Paul Mason has a helpful list of all the currency wars worldwide currently under way:
China versus the USA: in which the US wants China to allow the RMB to rise against the dollar, weakening China’s competitiveness by raising the price of Chinese exports.
There is the USA versus the Emerging Markets: in which the USA’s quantitative easing policy is seen to be exporting inflation, again forcing the currencies of Brazil, South Korea and other export giants to rise against the dollar.
…There is the Euro versus the dollar. Analysts at Goldman Sachs estimated that the entire negative impact of European austerity programmes in 2010 could be offset by a fall in the Euro’s exchange rate to parity with the dollar: to the extent that this does not happen, Europe bears the cost of its own crisis.
Then there is north Europe verus south Europe. The Eurozone is locked into one exchange rate but peripheral Europe has, over a nine year period lost competitiveness against the core industrialised and export-led countries above all Germany. Southern Europe cannot devalue, so it is being forced to impose an internal devaluation by the Eurozone authorities – which means massive austerity, wage cuts and the erosion of welfare state provision.
Then there is Japan versus America. When America did QE, so did Japan – in part justifying the move on the grounds that QE was an act of exchange rate competition.
Finally there is Britain versus the rest of the world. Sterling underwent a 25% devaluation during the Lehman crisis, stabilising at a net 20% fall against the currencies of its main trading partners. In this way Britain has offset the cost of the crisis, avoiding double-digit unemployment but amplifying the impact of the commodity price inflation that has now taken off.