Currency Wars

Currency wars occur when countries intentionally devalue their own currencies to make their exports cheaper and more competitive internationally. This can involve lowering interest rates or other policy measures, which can lead to a race where multiple nations devalue their currencies, potentially causing global economic instability. While intended to boost domestic growth, such practices can harm trading partners and disrupt exchange rates, leading to tensions among nations. It resembles a competitive undervaluation, with countries trying to gain a trade advantage at the risk of destabilizing the global economy.