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Currencies: The Weak Shall Inherit the Earth

In the past, it has been customary for countries to desire a strong currency – or at the very least a stable one. However, post the financial crisis its seems a strong and stable currency is not always at the top of the priority list. In fact. A depreciating currency stands a country in good stead in some ways, including helping companies who export gain market share. In the same way, a strong currency can bankrupt exporters, force down import prices, and create deflation at home. Obviously, falling incomes are not favorable in the midst of a debt crisis. However, when one country places currency appreciation on the back burner, often traders will seek out a new target. This, in turn, creates a ripple effect impacting a host of other countries and their policies. So, what does this mean for the future of foreign-exchange markets? Could it be that the weak really will inherit the earth?

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