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Is a post-COVID currency war coming?
Financial markets’ euphoric reaction to the recent COVID-19 vaccine breakthroughs and U.S. election results is pushing some currencies up so fast that rumblings have begun about a potential new FX war.“Honestly, if I were an EM policymaker, every day where my currency was strengthening I would be happy,” Brooks said, noting that a stronger currency also makes it cheaper to repay the dollar-denominated debt that has been piling up. Nevertheless, he thinks the euro and the yen will be shoved higher, requiring the European Central Bank and Bank of Japan to respond. China’s reaction will also be watched closely, ... (full story)