Beggar thy neighbour
Alfred Lam, CFA, Senior Vice-President and Chief Investment Officer
Marchello Holditch, CFA, Vice-President and Portfolio Manager, CI Multi-Asset Management
A beggar-thy-neighbor economic policy is when one country attempts to remedy its economic problems by means that tend to worsen the economic problems of other countries. In the last few weeks, the trade war has morphed into a potential currency war, in which countries devalue their currencies to get a competitive edge for their exports. We have seen unconventional monetary policy (quantitative easing, negative interest rates) indirectly cause currency devaluations in the past, but the key concern this time is with respect to China’s overt exchange rate targeting policy.
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