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Opinion
Gary Shilling

Why Countries Wage Currency Wars

The U.S. dollar has been on a tear this year, partly because other economies are deliberately cheapening their currencies to get a leg up.
Countries wage economic war here.

Countries wage economic war here.

Paul Hilton, Bloomberg

The U.S. dollar has been on a tear this year, rising against the currencies of virtually all major developed economies. What we’re seeing around the world is intense -- and in some cases, deliberate -- devaluations. What’s going on and what are the investment implications?

One reason for the devaluations is that, when economic growth is weak -- as it has been globally for five years -- governments feel tremendous pressure to increase exports and reduce imports to restore growth. Often that means lowering the value of the currency so that products sent abroad are relatively less expensive and those coming into the country more so.