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

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’.”

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

(Market News Provided by FXstreet)