Also known as a competitive devaluation, a currency war is a condition where countries compete against each other to achieve a relatively low exchange rate for their own currency. As the price to buy a particular currency falls, so to does the real price of exports from the country. Imports become more expensive too, so domestic industry, and thus employment, receives a boost in demand both at home and abroad. However, the price increase in imports can harm citizens' purchasing power. The policy can also trigger retaliatory action by other countries which in turn can lead to a general decline in international trade, harming all countries. One of the most well-known periods of currency war and devaluation happened during the 1930's, where France, the UK, the US, and other countries devalued their currencies against each other in an attempt to steal market share away from one another.
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