CURRENCY WAR- REASONS AND REPERCUSSIONS

Currency war or competitive devaluation is a situation in which countries try to gain a trade advantage over other countries by causing the exchange rate of the domestic currency to fall in relation to other currencies. Every country would want to prosper, but why does it depreciate its currency? There are 3 reasons: Firstly, to boost the exports. Secondly, to reduce the trade balance deficit and thirdly to reduce the debt burdens. It is a global phenomenon and has various positive and negative impacts. For developing countries, it is a loss situation at the time of implementation of currency and loss of competitiveness as well as removal. It might sound different, but a strong currency necessarily does not serve in a nation's best interests. Today value of one dollar is equal to seventy rupees. If India wants it could bring down the value of dollar in comparison to rupees by tweaking its economic policies, but this will reduce India's profit which it earns from various sources such as IT exports, FDI, Tourism etc. Therefore, India does not appreciate its currency and likewise every country has its system. This paper with through light on why currency war is there and what will be its repercussions on us