Valutakriget fortsätter och bidrar till hög volatilitet vilket kommer att leda till turbulens på andra marknader.
It is a trend of countries intentionally deflating their currencies that economists have dubbed a “currency war.”
Only after the Asian financial crisis in 1997 and the days following the collapse of Lehman Brothers in 2008, have currencies been more volatile, said Bank of America Merrill Lynch strategist David Woo.
That measure of volatility is based on a gross-domestic-product-weighted range-based index of currencies of the 20 largest economies in the world, which shows this current bout of currency swings as the third highest in 20 years as the included chart illustrates.
“Of course, these two previous episodes were both crisis periods. From this point of view, we can say that currency volatility is the highest for non-crisis periods in twenty years,” the Bank of America strategist said in a note to investors.
Woo cautions that the unintended consequence of this type of insidious currency war could lead to greater volatility which in turn could undermine healthy global trade and investment.