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Currency War and It's Influence for Indonesia

In: Business and Management

Submitted By haryoseno150
Words 1308
Pages 6
Currency War Issue
Currency war becomes hot topic in several mass media lately. G-7 group even reminded, war could disrupt the currency of world economic growth. This war was carried out by countries that want to increase exports.
Countries deliberately weakening its currency exchange rate so they could increase their exports. The world financial leaders including the World Bank and International Monetary Fund (IMF), has also discussed this issue at a meeting in Washington in early October 2010.
On the occasion, the IMF warned the governments in some countries not to use exchange rates as a tool to encourage increased exports, because it can cause a currency war between the countries in the world.
Some countries being criticized for its policies to keep their currencies remain weak. Japan, for example, they intervene for the first time since 2004, to sell 2.12 trillion yen on September 15. This is to protect the increase in the yen exchange rate that has reached its highest level in 15 years.
The debate actually starts from the currency war between China and the United States. US have been protesting China over the years. US judge China to hold its currency not to strengthen to protect its exports. US even plans to establish sanctions against China for not allowing its currency to strengthen against the U.S. dollar as it should.
China's rapid economic growth has caused China's trade surplus against its trading partner countries to increase. In the second quarter of 2010, China's economy grew 10.3 percent, from 11.9 percent growth in the previous quarter. However, on the contrary, many Chinese trading partners are experiencing widening trade deficit, including the U.S.
In 2009, the U.S. trade balance deficit with China has more than 220 billion U.S. dollars. This figure rose sharply from a deficit balance of trade a decade earlier, which only reached 69 billion…...

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