Manipulating their currencies has become governments¡¯ new weapon in the battle for economic recovery. In recent months, a string of countries have tried to drive down the value of their currencies to boost export.

Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), showed concerns over this issue. ¡°There is clearly the idea beginning to circulate that currencies can be used as a policy weapon. Translated into action, such an idea would represent a very serious risk to the global recovery,¡± she said.

Japan is one of the most aggressive governments trying to intervene in the currency market. On September, the Bank of Japan began a massive sale of yen and bought dollars instead to weaken the yen¡¯s value against the dollar and so make goods exported by such firms as Sony and Panasonic cheaper.

Japan¡¯s ailing economy is dependent upon an export-led recovery so when the yen hit a 15-year high against the dollar Tokyo, it seemed that they decided to make a move.

America is having a dispute with China on this issue for a long time. Washington constantly accused Beijing of manipulating the yuan¡¯s value and making U.S. exports more expensive. But, China doesn¡¯t seem to change their policy on currency despite the denouncement of the U.S.
Such tension regarding the value of currency won¡¯t alleviate as the major economies seem in no mood for compromise. ¡°Rather than accusing China for their problems, the U.S. should lead efforts to coordinate exchange rate policies and put the issue on the global agenda,¡± said Dr. Paola Subacchi, research director for international economics at Chatham House in London. .