Currency Conflict Business & Marketing Case Study Paper (Case Study Sample)

Currency Conflict
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Task I
Currency Conflict
Definition and How it Works
Currency conflicts arise when nations take advantage of the global trade by positioning their currency at an inferior value than justified by the market outcomes and market forces. They weaken their currency by devaluing or depreciation of the fixed exchange rates. Although similar to currency manipulation, which relates to reducing the export prices and increases the prices of imports lower than their potential market condition to increase the expansion of the export in support of domestic production of imports, currency conflicts are different. Currency manipulation increases the competitiveness of a country's products as exports become cheaper, which boosts international trade (Bergsten & Gagnon, 2017). An increase in exports is enhanced by lower costs of domestic production, which creates jobs, increases the demand for resources, and investments. Exchange rates are an integral element of a trade position and economy of a country. International trade requires that there should be a balance between the deficits and surplus; thus, when exchange rates take an unfair practice such as competitive devaluation, it creates currency wars.
Who is Involved in the Currency Conflict