Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy  School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate.

May 26, 2022  — The value of the US dollar is up 14 % against the euro, over the last year from 1.21 $/€ in May 2021.  At 1.05 $/€, it is approaching one-to-one parity for the first time.  If you think that prices for oil and other commodities are now high in terms of dollars, you should see what they look like in terms of euros! Get ready for “reverse currency wars.”

The regular sort of currency wars were characterized by countries feeling aggrieved that their trading partners were deliberately pursuing policies to weaken their own currencies.  The feared motive would be gaining unfair advantage in international trade.  The original phrase “currency wars” was

Keep reading this article on Econbrowser Blog - James Hamilton & Menzie Chinn.

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