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Exporting Deflation

Currency wars are back, though this time the goal is to steal neighbors' inflation, not growth.

By David Goodman, Lucy Meakin, and Ye Xie, Bloomberg | Updated on October 22, 2014

Brazil Finance Minister Guido Mantega popularized the term “currency war” in 2010 to describe policies employed at the time by major central banks to boost the competitiveness of their economies through weaker currencies. Now, many see lower exchange rates as a way to avoid crippling deflation.

Weak price growth is stifling economies from the euro region to Israel and Japan. Eight of the 10 currencies with the biggest forecasted declines through 2015 are from nations that are either in deflation or pursuing policies that weaken their exchange rates, data compiled by Bloomberg show.

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