What is it about?

This chapter highlights (as well as addresses) amongst other issues, the growing impacts of currency devaluations and currency wars on global financial stability - namely, global stock markets. Whilst the devaluation of currencies may be used as weapons in mitigating tariff hikes, their potential to destabilise stock markets through increased uncertainty is not only highlighting their potential magnitude on economic and monetary policy matters, but also their significance in respect of future possible unilateral actions - in respect of digital services taxes, can also impact trade relations.

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Why is it important?

As well as ongoing trade wars, there are concerns about over supply in oil production - as well as its impacts on the global financial markets in respect of recent reports (WSJ, Aug 2019), where it is highlighted that “growth in oil supply is forecast to accelerate in 2020 – in a global wave of production”, with the results that this would restrict crude prices in a bear market territory – with “possible lower fuel prices” for consumers...............

Perspectives

It appears that the coming months ahead will be characterized by headlines relating digital services taxes, crypto asset considerations - as well as regulatory matters involving privacy and the need to address cyber security issues. How do these matters relate to currency and trade issues? As illustrated in the ongoing trade disputes - as well as disputes involving large tech companies, unilateral actions by several jurisdictions also threaten the risks of retaliatory actions (in the form of tariff hikes) - as well as considerations to mitigate the effect of tariff hikes through currency devaluations... The impacts of oil import price increases - as well as factors impacting such increases are also determined by several factors such as the value of the dollar, over supply or possible cuts in production, and it is not always the case that oversupply or over production automatically implies or necessarily translates into lower prices.

Prof Marianne Ojo
Northwestern University

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This page is a summary of: Currency and Trade Implications, IGI Global,
DOI: 10.4018/978-1-5225-4131-8.ch004.
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