Event Types

Currency War

Currency War

Parent

A Currency War takes place when two or more countries try to devalue their currencies against each other for their own economic benefit.

  • Currency Wars tend to start when countries experience weak growth and excessive debt
  • Countries try to increase growth by weakening their currency (to increase demand)
  • Typically currency weakening is only a short-term benefit
    • Can provide short-term boost in exports
    • Can reduce imports in short term
    • Can cause inflation ( to help deal with debt)
    • Short=lived because other countries will weaken their own currencies in retaliation
  • Currency wars can go on for years with each country (or multiple countries) weakening their currencies over and over
  • Currency wars tend to lead to trade wars (tariffs) because they don't have the intended long-term impact