Back in January, economists were gloomily warning about currency wars. The Bank of Japan had just announced negative interest rates and seemed to be threatening even lower – possibly much lower – rates to come. The ECB was set to respond at its meeting in March. And, of course, everyone was concerned about the prospect of a major Chinese devaluation. A few months after much of this talk has disappeared. There seems to be a ceasefire in the global currency ‘war’ and many economists attribute this to February’s G20 meeting in Shanghai. Even before the G20 meeting, some sell-side analysts were predicting a new Plaza Accord, whereby policymakers might coordinate more closely in an effort to push the major currencies in the desired direction.
So, are we now entering a new area of policy harmonisation? Is there a Shanghai Accord? Click below to find out.