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Currency wars have proven futile in the post-crisis era – Deutsche Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 25, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Gautam Kalani, Research Analyst at Deutsche Bank argues that currency wars have proven futile in the post-crisis era.

    Key Quotes

    Currency adjustment is not enough to spur growth significantly because global trade is increasingly less important to the overall makeup of GDP.

    A significant undervaluation of an EM currency may not be sufficient to drive appreciation via the current account channel; rather, even more currency adjustment may be required for some undervalued currencies.

    One should be wary about long a currency on the basis of BEER undervaluation if it is also showing FEER overvaluation, as FEER overvaluation signals that the current account balance is still below its long-term average and therefore has not adjusted by ‘enough’.”
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