IMF talks down fears over ‘currency wars’

The chief economist at the International Monetary Fund has talked down fears of a looming 'currency war' that could place further pressure on Australian manufacturers.

Global commentators have recently pointed to early indications of a currency war, and in Australia some pundits have claimed a skirmish may already be on our doorstep.

A currency war is a condition where countries compete against each other to lower the value of their currency in order to boost demand for locally made products.

At a news conference earlier this week IMF chief economist Olivier Blanchard said there were few indicators to suggest countries were competitively lowering the value of their currency.

“I think this increasing talk of currency wars is very much overblown,” he said.

“Countries have to take the right measures to get their own economies back to health … [and] to the extent we think the policies are appropriate, then the implications in terms of exchange rates are also appropriate.

“I think really the talk of currency wars is just inappropriate at this point.”