Trade Wars, Currency Wars and Mutually Assured Destruction
Bloomberg
Published Aug 09, 2019 02:33PM ET
Updated Aug 09, 2019 04:18PM ET
Trade Wars, Currency Wars and Mutually Assured Destruction
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On Monday, China let its currency depreciate by the most since 2015, then later in the week President Donald Trump put more pressure on the Federal Reserve to cut interest rates to weaken the U.S. dollar.Has the trade war morphed into a currency war? And what are the implications for global markets? Bloomberg's Emily Barrett fills in as co-host on this week's “What Goes Up” podcast for Sarah Ponczek, while Bloomberg’s macro strategist Cameron Crise and currencies reporter Katherine Greifeld also join the conversation.“We are kind of seeing the shots fired in a currency war,” says Crise. “And the problem is if everyone cuts rates to weaken their currency, we’re not on the gold standard -- the whole world can’t devalue against sort of a central peg. If everybody wants a weaker currency and cuts rates to delivery it, you’re going to end up essentially right back where you started on a relative basis, except with less ammunition in terms of conventional rate cuts to fight against the next global recession.’’
Mentioned in this podcast: U.S. Intervention Odds Rise as Yuan Plunge Fuels Trump's FX Fury What Exactly Does Trump Want for the Dollar? The Fate of the World’s Largest ETF Is Tied to 11 Random Millennials
To contact the authors of this story: Michael P. Regan in New York at mregan12@bloomberg.netSarah Ponczek in New York at sponczek2@bloomberg.net
To contact the editor responsible for this story: Topher Forhecz at tforhecz@bloomberg.net
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