Should competitive devaluation of exchange rates spearhead a nation’s trade policy?
Reduced consumption, restricted spending, stubborn unemployment, inventory excesses, and fiscal tightening coerced the likes of leading deficit nations like the US to engage in expansionary actions like the $600bn QEII policy initiatives, which sapped the strength of the currency primarily to export their way out of recession. The dollar has depreciated by more than 10% since the commencement of the QE measures and Pound Sterling depreciated by 4% respectively. The surplus nations on the other hand, witnessed unparalleled upward pressure on their currencies. The likes of Brazil saw its currency appreciating by as much as 38% in the last two years. This gigantic scale of currency appreciation is fast imperiling their mercantilist web of companies which are primarily export-driven. This loss of competitiveness is driving countries from China to Chile to artificially adjust their exchange rates by constantly intervening in the global foreign exchange markets making their Central Banks mor
