Global macro research

Currency devaluation as a policy tool

In the case of the US, some policymakers are considering currency devaluation as an economic stimulus tool for the first time this century.

We believe:

  • it is highly unlikely an intervention would succeed in significantly lowering the value of the US dollar in the medium term
  • even if successful, it would likely fail to narrow the trade balance
  • it would materially risk sparking a ‘currency war’ between the US and its peers

As such, we see a low but not insignificant probability that the US will intervene in currency markets within the next year. However, it may become harder to rule out intervention over the longer term.

The widening US trade balance has become a political issue

Source: Bloomberg, September 2019.


Download button

Important Information

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This document must not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or otherwise not permitted. This document should not be duplicated, amended or forwarded to a third party without consent from Insight Investment.

This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass.

Past performance is not indicative of future results.

References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell securities. Forecasts of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice.

The information and opinions are derived from proprietary and non-proprietary sources deemed by Insight Investment to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Insight Investment, its officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader.

Contact Us

Call our team on +44 20 7321 1023

or email General enquiries

Please read important information about Insight's data collection policies HERE before sharing your personal information with us on email.