Favorable monetary policy changes have been seen as the go-to instrument to bolster economic growth in a period of fiscal austerity and diminished consumer spending. Consequently, many countries are depending on a weaker currency and higher net exports to make up for the shortfall in economic activity. However, as more central banks turn to easing, they will push the burden onto another countries – if one currency is weak, another has to be stronger.
“The cause of the latest currency turmoil is clear: In an environment of private and public deleveraging from high debts, monetary policy has become the only available tool to boost demand and growth,” according to Roubini.
PowerShares DB U.S. Dollar Index Bullish Fund
For more information on the currency market, visit our currency ETFs category.
Max Chen contributed to this article.