IMF boss sees low risk of 'currency war'

[Ghost Dog]

Source: AFP

... Amid mounting anger that economic powers are pouring money into currency markets to make exports cheaper at the expense of rivals, Strauss-Kahn insisted the potential impact of an all-out currency war should give countries pause.

"I don't feel today that there is a big risk of a currency war. But that's part of the downside risk," Strauss-Kahn told reporters in Washington. "I think the probability is rather low, because everybody can understand that too big conflicts... will have a negative impact. Nevertheless it may happen."

His comments come a day after Brazilian finance minister Guido Mantega vented his anger at the impact the rising Brazilian real has had on the country's vital export sector.

...


US lawmakers were expected to vote on Wednesday to introduce sanctions against China if the undervalued yuan is not allowed to rise against the dollar.

Read more: http://www.france24.com/en/20100928-imf-boss-sees-low-risk-currency-war

---

He's saying the risk is low because the negative consequences would be so large. He appears to think macroeconomic policymakers everywhere behave rationally. As far as I can see this war has already begun, with the first serious shots being fired this very month.