News / Economy

    IMF Meeting Stokes Fear of Currency War

    Multimedia

    Fears of a global currency war have increased after the meeting of finance leaders at the International Monetary Fund in Washington last week. Talk of trade imbalances and uneven growth due to artificially low currencies has already sparked discussions about possible intervention.  Analysts say it's an issue that's not likely to go away anytime soon. 

    As nations emerge from the global downturn, it's becoming clear that some countries are recovering faster than others.

    In its most recent outlook, the International Monetary Fund says growth in developed countries will remain sluggish - even as emerging economies, especially those in Asia, are booming.

    Last week, World Bank President Robert Zoellick warned that uneven growth is causing friction.

    "We see this now in debates on currencies: developed countries are easing monetary policies; some developing countries are tightening in response to growth; some surplus countries are intervening to lower the value of their currencies to boost exports," he said. "And all this is causing international tensions."

    The failure of finance ministers to come up with solutions last week in Washington has only deepened the divide. IMF managing director Dominique Strauss-Kahn.

    "Many are talking about a currency war," he said. "Myself, I think I use this vocabulary which may be a bit too military. But it's true to say that many do consider their currency as a weapon and that's certainly not for the good of the global economy."

    The US, for example, blames China's undervalued currency for contributing to the massive trade imbalance between the two.  

    And countries such as Japan and Brazil have threatened to devalue their currencies to gain a competitive edge in exports.

    Economist Toby Nandle says it's a big problem with no easy solutions.

    "This is not a problem that can be delegated to an international organization such as the IMF," he said. "It's a problem that needs to be addressed by heads of state and by finance ministers because the resolution of said problem has profound affects on different economies."

    Among them, China.  

    Beijing has pledged greater flexibility in determining the value of the yuan. But Chinese premier Wen Jiabao says it will not happen overnight.

    "Without this stability of the RMB exchange rate, there would be no stability for businesses, for employment, for our people, and also, if China has social and economic problems, it would be a disaster for the world," he said.

    Experts say currency disputes have already jumped to the top of the queue as world leaders prepare for the G-20 summit in South Korea.  Barring a resolution, Nandle says the warning from Brazil could become reality.

    "If there is no agreement by November 12th as to the global disconnect, I think that Guido Mantego [Brazil's Finance Minister] hit the nail on the head - we have a global currency war underway," he said.

    Governments can devalue their currencies in different ways - from giving their central banks the ability to set margins on exchange rates to buying up foreign currencies to lower demand for their own.  

    Economists say the resulting fluctuations would have serious implications for trade, causing nations to demand additional tariffs, and even blockades, against cheap imports.  

    Such laws would hurt trade, further delaying a global recovery.

    You May Like

    Clinton, Trump and the 'Woman’s Card'

    Ask supporters of Democratic front-runner in US presidential campaign, and they’ll tell you Republican presidential candidate is playing a dangerous hand

    Russian Censorship Group Seeks Chinese Help to Better Control Internet

    At recent Safe Internet League forum in Moscow, speakers from both nations underscored desire for authorities to further limit and control information online

    Video Makeshift Pakistani School Helps Slum Kids

    Free classes in Islamabad park serve a few of the country’s nearly 25 million out-of-school youths; NGO cites ‘education crisis’

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Turkish Kurd Islamist Rally Stokes Tensionsi
    X
    April 29, 2016 12:28 AM
    In a sign of the rising power of Islamists in Turkey, more than 100,000 people recently gathered in Diyarbakir, the main city in Turkey’s predominantly Kurdish southeast, to mark the birthday of the Prophet Muhammad. The gathering highlighted tensions with the pro-secular Kurdish nationalist movement. Dorian Jones reports from Diyarbakir.
    Video

    Video Turkish Kurd Islamist Rally Stokes Tensions

    In a sign of the rising power of Islamists in Turkey, more than 100,000 people recently gathered in Diyarbakir, the main city in Turkey’s predominantly Kurdish southeast, to mark the birthday of the Prophet Muhammad. The gathering highlighted tensions with the pro-secular Kurdish nationalist movement. Dorian Jones reports from Diyarbakir.
    Video

    Video Pakistani School Helps Slum Kids

    Master Mohammad Ayub runs a makeshift school in a public park in Islamabad. Thousands of poor children have benefited from his services over the years, but, as VOA's Ayesha Tanzeem reports, roughly 25 million school-age youths don't get an education in Pakistan.
    Video

    Video Florida’s Weeki Wachee ‘Mermaids’ Make a Splash

    Since 1947, ‘mermaids’ have fascinated tourists at central Florida’s Weeki Wachee Springs State Park with their fluid movements and synchronized ballet. Performing underwater has its challenges, including cold temperatures and a steady current, as VOA’s Lin Yang and Joseph Mok report.
    Video

    Video Somali, African Union Forces Face Resurgent Al-Shabab

    The Islamic State terror group claimed its first attack in Somalia earlier this week, though the claim has not been verified by forces on the ground. Meanwhile, al-Shabab militants have stepped up their attacks as Somalia prepares for elections later this year. Henry Ridgwell reports there are growing frustrations among Somalia’s Western backers over the country’s slow progress in forming its own armed forces to establish security after 25 years of chaos.
    Video

    Video Bangladesh Targeted Killings Spark Wave of Fear

    People in Bangladesh’s capital are expressing deep concern over the brutal attacks that have killed secular blogger, and most recently a gay rights activist and an employee of the U.S. embassy. Xulhaz Mannan, an embassy protocol officer and the editor of the country’s only gay and transgender magazine Roopban; and his friend Mehboob Rabbi Tanoy, a gay rights activist, were hacked to death by five attackers in Mannan’s Dhaka home earlier this month.
    Video

    Video Documentary Tells Tale of Chernobyl Returnees

    Ukraine this week is marking the 30th anniversary of the world's worst nuclear accident, at the Chernobyl nuclear power plant. Soviet officials at first said little about the accident, but later evacuated a 2,600-square-kilometer "exclusion zone." Some people, though, came back. American directors Holly Morris and Anne Bogart created a documentary about this faithful and brave community. VOA's Tetiana Kharchenko reports from New York on "The Babushkas of Chernobyl." Carol Pearson narrates.
    Video

    Video Nigerians Feel Bite of Buhari Economic Policy

    Despite the global drop in the price of oil, Nigerian President Muhammadu Buhari has refused to allow the country's currency to devalue, leading to a shortage of foreign exchange. Chris Stein reports from Lagos businessmen and consumers are feeling the impact as the country deals with a severe fuel shortage.
    Video

    Video  Return to the Wild

    There’s a growing trend in the United States to let old or underused golf courses revert back to nature. But as Erika Celeste reports from one parcel in Grafton, Ohio, converting 39 hectares of land back to green space is a lot more complicated than just not mowing the fairway.
    Video

    Video West Urges Unity in Libya as Migrant Numbers Soar

    The Italian government says a NATO-led mission aimed at stemming the flow of migrants from Libya to Europe could be up and running by July. There are concerns that the number of migrants could soar as the route through Greece and the Balkans remains blocked. Western powers say the political chaos in Libya is being exploited by people smugglers — and they are pressuring rival groups to come together under the new unity government. VOA's Henry Ridgwell reports.
    Video

    Video Russia’s TV Rain Swims Against Tide in Sea of Kremlin Propaganda

    Russia’s media freedoms have been gradually eroded under President Vladimir Putin as his government has increased state ownership, influence, and restrictions on critical reporting. Television, where most Russians get their news, has been the main target and is now almost completely state controlled. But in the Russian capital, TV Rain stands out as an island in a sea of Kremlin propaganda.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8769
    JPY
    USD
    107.28
    GBP
    USD
    0.6842
    CAD
    USD
    1.2528
    INR
    USD
    66.384

    Rates may not be current.