What is a currency war and are we heading for one?

By Puneet Pal Singh
Business Reporter, BBC News, Singapore

Published
image captionThe yen has fallen sharply against against the US dollar and the euro since November

The value of a currency can make or break a country's economy.

If it is too high, it makes the country's exports less competitive. It is is too low, it makes imports too expensive and can trigger high rates of inflation.

At the same time, sharp movements in a currency's valuation often trigger money market fears. The latest have been sparked by a big decline in the yen's value over the past months.

Meanwhile, the euro has risen against a basket of currencies, prompting senior leaders from the region to voice their concerns.

It is little surprise then, that as the finance ministers of the world's 20 biggest economies meet in Moscow, a discussion about currency valuations is expected to be high on the agenda.

Ahead of the meeting some have even warned that the threat of a so-called currency war is looming large on the global economy.

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