In the G-20 summit this past weekend, the world’s finance ministers agreed not to engage in currency wars to boost exports. Currencies in emerging markets have been battered since the financial crisis began in 2007. Traditionally, countries expect a payoff in a boost of exports when their currency is weak; however, it’s not been the case this time around. This is the case not only due to slowing growth in China and rapidly decreasing oil prices, which has hurt commodity exporters, but also the Federal Reserve’s increase in interest rates. The possibility of interest rate increases in the United States has put pressure on currency markets.

Malaysia and Indonesia, both countries that are dependent on commodity-related revenues, have had their financial situation deteriorate due to low oil prices which used to compromise large parts of the budget revenue. Recently, China’s central bank urged for a wider fiscal deficit to help boost economic growth. The increase of government debt in emerging markets is putting more pressure on their currencies. Many central bankers were hoping that weaker currencies would be a boost to exports were proven wrong; according to the Netherlands Bureau for Economic Policy Analysis, measured in U.S. dollars, the value of global trade fell by 13.8% in 2015.  According to signals from data, exports missed their mark, and global trade is again slumping in 2016.

Governmental currency intervention is a form of manipulation, so the U.S. will push the EU and Japan towards fiscal stimulus and for China to continue to overhaul its economy. Historically speaking, it is possible for there to a currency agreement without the use of any monetary tools. In 1985, a rising dollar was increasing the U.S. trade deficit and increasing U.S protectionism policies, so officials of the world’s five largest economies agreed to push the dollar down through coordinated market intervention.

Currently, the economic situation isn’t too far from where it was nearly 31 years ago, but there are many differences in the policies and the tools available. Central banks in the Eurozone, China, and Japan have been using easier monetary policy and lower currencies to attempt to stimulate growth, and the U.S.  Federal Reserve Bank has raised interest rates, which have curbed exports and economic growth. Back in 2013, most of the major players declared that to intervene in currency is a form of manipulation, and the Federal Reserve continues to back this policy believing that the world economy stands to benefit the most when each bank is solely focused on their own individual economy. This vast divergence in global monetary policy has assisted in fueling the current market turmoil.

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