Reverse currency wars’ is real

Many countries complained that the resulting dollar weakness would hurt their trade in a low-growth world and force them to overheat by trying to match the Fed’s easy money in the 10 years after the US Federal Reserve originally set out on bond-paying quantitative facilitating to avert collapse.

But that all changed after the Fed’s aggressive move this year to rein in 40-year-high inflation with sharply higher interest rates, a halt to new asset purchases, and a planned rundown of its $8 trillion-plus balance sheet.

As a result, the dollar’s index against other major currencies has risen nearly 20% in the last year, leaving US trading partners with the opposite problem of trying to support rather than cap currencies for fear that their weakness would make dollar-priced energy and food imports even more expensive, exacerbating already-high inflation everywhere. 

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