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Will China Break the Currency Truce?
In the past five years, first the dollar, then the yen, and now the euro have tumbled as their respective central banks have undertaken large-scale bond-buying, or “quantitative easing” (QE). This is not a zero-sum currency war: QE sends money cascading across borders, bolstering asset markets and often triggering reciprocal monetary easing. Everyone wins. But it’s a different matter if China devalues; that would kick off a currency war. Why the difference? Usually, monetary policy and currency policy are joined at the hip. When a country lowers interest rates (or buys bonds), the currency falls as money seeks ... (full story)
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