Kevin Adam_ Miller

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What is currency war and how does it affect forex markets?

A currency war occurs when countries deliberately devalue their currencies to gain trade advantages. Methods include interest rate cuts, quantitative easing, and direct intervention. Example: the “beggar-thy-neighbor” policies of the 2010s, when multiple nations weakened currencies to boost exports. Benefits: short-term competitiveness. Risks: retaliation, capital flight, and global instability. For traders, currency wars mean heightened volatility and prolonged weak trends in targeted currencies. Retail traders should watch central bank policies, trade disputes, and G20 statements for signs of competitive devaluation. Currency wars show how forex reflects not just economics but geopolitical battles over trade and growth.