The Currency Wars Are Heating Up

Twenty-five central banks have lowered rates since the start of this year — some more than once — according to data from CentralBankRates. It is one way of engaging in currency war and it’s not new. The US did it with QE in 2008, continued for several years, and then several other countries either devalued their currencies or cut interest rate. ECB and Japan launched massive QE programs.

News headlines of currency devaluations in 2015

  • Turkmenistan – Jan, 2015 – Energy-rich Turkmenistan devalues currency against dollar
  • Belarus – Jan, 2015 – Belarus devalues its ruble by 7%
  • Nigeria – Feb, 2015 – Naira devalued again, trades at N198 to dollar
  • Azerbaizan – Feb, 2015 – Azerbaijan devalues currency by one-third amid oil price
  • Venezuela – Feb, 2015 – Currency Devaluation Baffles Shortage-plagued Venezuelans
  • Vietnam – May 2015 – SBV lowers dong’s value by 1% in second devaluation of 2015
  • Angola – Jun, 2015 – Angola Central Bank Devalues Currency as Oil Slide Hits Revenue
  • Egypt – 6 July 2015 – Egypt’s currency devalued in attempt to encourage investment

The major countries that cut interest rates in 2015 (and the number of times they did it)

  • Australia – 2
  • Canada – 2
  • China – 3
  • Denmark – 1
  • Egypt – 1
  • Hungary – 5
  • India – 3
  • New Zealand – 1
  • Norway – 1
  • Russia – 4
  • South Korea – 2
  • Sweden – 3
  • Switzerland – 1
  • Thailand – 1
  • Turkey – 2
  • Israel -1
  • Indonesia – 1
  • Romania – 4

Countries have become significantly more aggressive on the currency front since this year. The future is definitely going to be more volatile in the coming years. Those who deal with currencies, energy or metals will see turbulent times ahead.

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