Falling Yen Set to Spark Renewed Currency Wars!

• Falling yen set to spark renewed currency wars! 
  by Liam Halligan, http://www.telegraph.co.uk/ 
  History shows currency disputes can escalate from rhetorical spats into disastrously counter-productive economic conflict.
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  In September 2010, the Brazilian Finance Minister, Guido Mantega, pointed a rhetorical finger at the United States and accused the world’s largest economy of conducting a “currency war”. Suggesting that emerging markets were being unfairly squeezed by a falling dollar, which makes US exports more competitive, Mantega lit the touch paper on a controversy that won’t go away.
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  For now, “currency wars” are a relatively arcane debate limited to foreign exchange specialists and diplomats. But this issue has already adversely affected hundreds of millions of people who consider themselves largely immune to the vicissitudes of international markets, not least in the UK. History shows, also, such currency disputes can escalate from rhetorical spats into disastrously counter-productive economic conflict.
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  “Currency wars” have hit the headlines anew in recent weeks, given Japan’s attempts to force down the yen. Freshly installed prime minister, Shinzo Abe, determined to stimulate a moribund economy, has ordered Japan’s ultra-conservative central bank to be more expansionary.
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  The Bank of Japan has announced it will raise its inflation target to 2pc, while trying to reach that goal “at the earliest possible date” and phasing-in hefty government debt purchases. Governor Masaaki Shirikawa will also be replaced by a more compliant successor when he retires in April.
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  Japan has been treading economic water for over 20 years, ever since its almighty real estate bubble burst in the early 1990s. Still the world’s second-largest economy when the credit crunch began in late 2007, the country has since slipped back to third-place and counting, its GDP having contracted for six of the last eight quarters. Despite all that, Abe’s decision to take drastic measures has sparked a chorus of complaints.
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