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Currency+Wars.+A+Fight+to+Be+Weaker - Currency Wars A Fight...

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Currency Wars: A Fight to Be Weaker Tensions Grow in Foreign-Exchange Market as Countries Scramble to Tamp Down Their Money September 29, 2010 By TOM LAURICELLA And JOHN LYONS Tensions are growing in the global currency markets as political rhetoric heats up and countries battle to protect their exporters, raising concerns about potentially damaging trade wars. At least half a dozen countries are actively trying to push down the value of their currencies, the most high-profile of which is Japan, which is attempting to halt the rise of the yen after a 14% rise since May. In the U.S., Congress is considering a law that targets China for keeping its currency artificially low, and in Brazil, the head of the central bank said the country may impose a tax on some short-term fixed income investments, which have contributed to a rise in the real. Peter Morici, business professor at the University of Maryland, discusses why he believes China's longstanding efforts to keep its currency cheap have led to huge trade imbalances with the United States and other nations. Businesses always want to be more competitive and politicians often talk a big game. But in the current environment, as many economies are still struggling to recover from the global financial crisis, worries are growing that policy makers could be more aggressive in protecting their nation's business interests. Rising protectionism is "a very big risk," says Erin Browne, a macro stock market strategist at Citigroup. "And it's something that could move more into the spotlight after the [U.S.] election." Currency-market strains could also be a topic of discussion at next week's IMF/World Bank meeting in Washington where central bank and government finance officials will be gathering.
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