Investing.com - This week brought heightened volatility to the currency market as the view that a full-fledged currency war to see who can devalue and weaken its currency the most is well underway gathered pace.
Australia’s central bank fired its shot on Tuesday, when it cut its benchmark interest rate to a record-low 1.75%, prompting the Aussie to tumble more than 2% against the U.S. dollar.
Meanwhile, the People's Bank of China on Wednesday set the yuan's daily reference rate at 6.4943 to the dollar, weakening the currency by about 0.6% (USD/CNY). The cut by China's central bank was the biggest downward move since it devalued the currency in August and rattled markets worldwide.
Elsewhere, the euro rose to an eight-month high earlier this week, despite repeated attempts by European Central Bank officials to talk down the currency.
The biggest loser of all so far is Bank of Japan Governor Haruhiko Kuroda, who saw the yen strengthen to an 18-month high against the U.S. dollar this week after the BoJ held off from expanding its monetary stimulus late last month.
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