Tag Archives: exchange rates

How to win the currency war of words

By Mirela Roman

Central bankers have been striving to bring inflation down for a long time. But ironically, they took a U-turn after the financial crisis and are now trying to heal the wounds via negative or near zero lower-bound rates, “unorthodox” stimulus such as quantitative easing or various forward guidance and communication techniques.

As words almost became monetary policy tools, prices continue to stay stubbornly low or on a downward path. But there is one thing that bucks the trend, and its swings are even more sensitive to the way central banks talk than those of inflation.

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