For all the talk of renewed currency wars, the policy-driven depreciations that have dominated foreign exchange markets since the summer could have been described as a benign global conspiracy to restore the dollar’s primacy.
Fresh injections of stimulus by the European Central Bank and the Bank of Japan sent the euro and yen tumbling to multiyear lows against the greenback — helping their fight against deflation. Policy makers in Australia and New Zealand welcomed the US dollar’s rise after struggling with overvalued currencies for years. Many emerging markets were content to live with weaker currencies that helped their economies rebalance.
Nor did US politicians object. They appeared to endorse tacitly the assertion by Mario Draghi, ECB president, that “the exchange rate is the product of monetary policies that are on a diverging path . . . because of the different economic conditions”.