Posts
IMF managing director Dominique Strauss-Kahn
(pictured) says that the risk of a global currency war is "low" but can't be ruled out.
"I think the probability is rather low, because everybody can understand that too big conflicts... will have a negative impact. Nevertheless it may happen," he said.
Strauss-Kahn was addressing a charge made recently by Brasil's finance minister Guido Mantega who is disturbed at the rising real's impact on his country's exports.
"We're in the midst of an international currency war," Mantega said. "This threatens us because it takes away our competitiveness."
In what may be another version of beggar-thy neighbor, many nations are buying up local currency to drive down its price and make exports cheaper. It is also a reason for the soaring price of gold as investors see many currencies being devalued.
