World Domination with Currency- Are the Developed Countries playing a dangerous game?

It has been a long standing concern with many upcoming, developing economies like Brazil, India and Argentina that developed countries like the United States and other industrialized countries were plotting against the growth of their economies by artificially driving down the value of dollars, euros and yen. Grievous charges these, one against the spirit of competition and fair play, that are being supported by many more third world countries- blaming these superpowers for driving down the international value of their own currencies.

Any sudden changes and fluctuations in the value of individual currencies are always frowned upon. A rapid high makes the country’s exports less competitive in the world markets, while a rapidly declining currency raises the cost of imported materials like grains and oil, making it harder for governments to repay loans that they usually borrow in terms of dollars or euro. However, this recent accusation on the United States of America for ‘lowering’ the value of the dollar seems without any tangible proof. The Federal Reserve had recently slowed down the rate at which it was purchasing bonds- thereby strengthening the dollar in the long run. Are these third world countries trying to mask the impact of their domestic problems on their national currency by calling out these giants of the world economy? Maybe, yes.

Quoting some examples to prove the above point- the Argentine Peso is under pressure, thanks to its government’s misguided policies that surged the domestic inflation to over 28% last year. Turkey’s Central Bank has been slow at raising interest rates, despite a 7.4% inflation rate, thereby contributing to the Turkish Lira’s fall by over 9%. These examples illustrate that many times, the rich and mighty aren’t to be blamed for troubles at home. But, concrete economic steps must be enforced to check the shaky bearings of the domestic currency. Resolve, and not retribution, is the long term answer.