Currency wars - who benefits from them?
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Thread: Currency wars - who benefits from them?

  1. #1
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    Currency wars - who benefits from them?

    Currency wars - who benefits from them?



    Currency wars when this term appears :-

    The term "currency wars" appeared and was first used in 2010 in a statement by Brazilian Finance Minister Guido Mantega . When he warned of a Currency wars, you were about to start.

    Its high exchange rates due to the massive influx of US dollars flood coming from the United States in a desire to take advantage of the high growth rates and speed of capital turnover.

    This was a logical result of the quantitative easing process launched by the Fed at the time by "Ben Bernanke" and his companions on the open Market Committee to support his country's economy.

    These capital inflows have caused exporters in Brazil and other emerging countries to be in a vulnerable competitive position, forcing the government of the Latin state to levy taxes on foreign capital, as a result of which the growth of the economy has almost ceased since 2013 until it shrank recently in the second quarter this year and The local currency continued to decline..

    How to reduce currency value ?

    Currency value can be reduced by means of

    1-Direct intervention: This is a traditional way for central banks to sell local currency and buy their foreign counterparts, thereby contributing to the devaluation of the first.

    2-Interest rate employment: lowering the interest rate contributes to pressure on and abandonment of the local currency as it does not encourage borrowing or amounts to cheap money that does not give its owner an advantage.

    3-Quantitative easing: This famous tool was employed by the US central by buying debts, sovereign bonds and other assets in exchange for a liquid infusion.

    4-War of statements: statements by policy makers can give effect to any of the previous instruments by putting pressure on the currency and then lowering its value, but this may not bear fruit if the currency is strong and is a safe haven, for example, the Bank of Japan, which called for the launch of a quantitative facilitation program in 2013.


    Who started the currency war?

    It can't be determined exactly who launched this war. All countries deny responsibility for this and claim that what they do is just a reaction to protecting their economy, but we can say that .

    1 - When you see more than 20 countries, including major economies, between January and April this year, either lowering the interest rate or activating measures to support monetary policy easing, especially the European Central, what does that mean? It's a Currency, no doubt.

    2- Despite Japan's implementation of a quantitative facilitation program before America, launched by the Bank of Japan in March 2001 to fight price deflation, the notorious "quantum easing" program launched by the Federal Reserve in 2009 had its first version, the second in November 2010, and the third in September 2012 Longer the most influential months.It is true that many countries have taken a similar approach, but after a severe financial crisis such as the first from USA to the world 2007-2008, the federal bank moved to support the economy of his country, but in turn the world was in crisis.
    At the time, US Treasury Secretary "Timothy Jaithner" on most occasions and encounters pressed China, whose currency remains undervalued, giving its exporters a competitive advantage and giving the labor market more jobs at the expense of the United States.


    3- China is on Aug. 11 to reduce the value of the yuan in support of its exports to be charged with spreading turmoil in world markets.




    who benefits from them?

    It is possible to say that there is no benefit from this war because its consequences will be negative for everyone, and if the degree of negative influence is different, the impact will be strongest on developing countries and emerging markets in Asia, Africa and South America.

    With the end of the quantitative easing program in October 2014, a budget of more than $3.5 trillion was inflated, almost as large as Germany, and stock prices on Wall Street swelled with record levels of indicators.

    This is a huge bill, no doubt. The world will pay its results, not only the United States, but everyone is linked in one way or another with the US dollar, especially in the bond market, where central banks invest a large part of their reserves.

    1- With export subsidies, there is a movement of investments as well as wealth to export-dependent sectors, neglect of the rest of the sectors and hence internal structural disruption.

    2- The worst may happen in terms of long-term productivity reduction, where the importation of equipment and machinery remains costly for local firms, and if the devaluation does not parallel real structural reforms, productivity will eventually be compromised.

    3- The obstruction of world trade due to the ambush of "trade protection" by some countries in the face of a backlash against the reduction of their business partners.

    4- Prevent foreign investment from entering the discounted state for its currency why? The reduction process may cause currency fluctuation, which means a higher cost to hedge enterprises and companies wishing to invest and then escape or not come in the first place.



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  2. #2
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    A beautiful and important topic Ive heard a lot about the war of currencies between countries and their influence on the global economy. And how every country tries to manipulate the value of its currency to achieve as many gains as possible.


    What do you think will win the war this time? United States or China

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  3. #3
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    I'm glad you liked it.

    As we see the currency war it has great significance and effect especially in the current period on the global economy

    As for your question the answer is difficult-the United States of America has imposed additional sanctions and customs on Chinese products at the same time China has not responded strongly because China is the largest recipient of the American market at the same time, China has devalued its currency much weaker than the US actions against it. A

    Will Trump be satisfied with this or will he resort to further escalation with China?

    That's what we'll know.

    Although I don't think he's going to escalate, America has entered into powerful conflicts not only with its opponents, but also from the conflict to those who were allies--and the fear that everyone would unite against it and I would influence Trump's decisions.

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  4. #4
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    Well to my best of understanding, I think currency wars have started way back till now. It's smart to say when there is option of different countries having their own currency, a country who wants to be the world power will look to ensure that their currency is well sorted and valued among other countries. This is why the usd seems so powerful that most decisions that happens in the world comes from the United States. They do their best to export so much and import little as nothing which directly makes their currency the most sorted.

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  5. #5
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    Currency wars are seen everyday as we trade. After all, is that not the essence of forex., to see a weaker currency and acquire a stronger one.
    Funny enough, we use the USD as the base currency because of its immense stability..
    I particularly admire the confidence Americans have in their economy that makes them place stringent policies on importation.
    This singular move is what gave the USD its strength against other currencies and we can say that the Dollar is pretty much winning the war between currencies.

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  6. #6
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    Obviously trader will get benefit from currency war, with it market will have high volatility, because of that everytime trader make open position it will make a trader have a chance get profit bigger, unfortunately it will high risk, if not carefull trader will suffer big loss, and it will make country who have weak economies suffer too.

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  7. #7
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    Currency wars are happening and lots of traders could get some profits from this situation. For example, all the countries will not immediately converge to using only one currency for all transactions and the whole group , but it will be possible to keep using over a long period of time the multiple currencies that are available. That is the main reason why regulators have scheduled that currencies exchange all over the world are going to increase , with lots of differences and moves of pairs on all the continents. Traders could get some profits on the markets by investing in those currency pairs in order to get results for a long period of time , with markets levels.

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  8. #8
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    Actually, this war going on from the Beginning of 20th Century. After leaving gold standard all came under to the umbrella of Bretton woods. The world experienced fixed exchange rate for over 25 year during that regimes. Then all country leaved Bretton wood to experience Flexible exchange rate. Its all about fighting for currency. Now a days China playing its part and a country who are export gaining most from currency devalution.

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    With the recent ban of Huawei by United States, I start asking myself, who actually benefit from it. Perhaps I just list down all the thoughts that are running in my head.

    1. Huawei is the world second largest smartphone provider. So with that sanction, Huawei needs to get all their raw material from other countries that welcome them.
    2. By losing huawei as their customers, US companies are facing a big financial hole. I believe a lot of people are affected financially.
    3. The rise of new star. Huawei cannot use Google as their default apps. So they will cooperate with other software providers, such as Baidu. So here automatically Baidu benefit from this war.

    If you have more to add, feel free to do so.

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  10. #10
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    I think the trump trade war with China is not good for US economy, with the tariff trump has levied on some Chinese products, it will only make it more expensive for US consumers to afford and also the American export to China will also be expensive for Chinese consumers as they also levied their own retaliatory tariff on US products. Thus making America companies to earn less in China.

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