At the time when economic environment looks uncertain and is not having a proper momentum, monetary policy regimes from all around the world have taken the center stage to counter the ongoing global economic issues. The US economy had to lower the interest rate and time and again had come up with quantitative easing programs. The hidden motive behind these actions could be to turn into competitive stance in the global economic environment as the printing of more money devaluates the currency value, ultimately giving the competitive advantage to the country. Likewise, similar policy was adopted by the world’s second largest economy i.e., China which is consistently been criticized by its trading partner for pegging its currency at much lower than where it should be.

Similarly, more countries have joined this so called Currency War as the Japanese government has prioritized the devaluation of Yen as one of the major agenda in its economic program. This year alone, Yen has lost 7.09% and 8.57% against USD and Euro respectively, which clearly suggests that the currency war would be only getting bitter in the days to come. This move by the Japan is being complained by the Europe and South Korea as they are also the major trading partner of ‘the land of rising sun’.  However, South Korean currency has also been in sliding momentum since December as it declined by 2.53%.

In this situation, Euro zone is also being pressurized to devaluate its currency, i.e., Euro, as the economically troubled zone is facing tough competition in the international market. Recently, France has also proposed for a debate on the Euro exchange rate signaling towards the devaluation of the currency. France is mainly worried about the strengthening of euro making its export lesser competitive in the global market. In the globally interrelated and competitive economic environment, any major stances in the monetary policy adopted by one country affect the different countries. For Example, the devaluation of Yen can give the Japanese industries a sign of relief but for the countries like German it would be having negative consequence as the stronger Euro impact their export. 

In the coming days, the so called “Currency War” can be expected to get only worse if the European Union joins the tussle as all of the major economic powerhouse are involved in the currency devaluation in this ongoing fragile economic environment. This is expected to continue unless the global economy takes off to some comfort zone, whereas for now, unexpected and unstable currency market could be expected.