(Image Source: Irish Times)

BY UNA LUE

ANCHOR ANA COMPAIN-ROMERO

You're watching multisource world video news analysis from Newsy.

A new stage in the global currency devaluation competition -- starts now. A rush away from the dollar -- but toward what?  A financial analyst on CNBC says, Japan and Switzerland are pushing over the first domino.

“We’re getting more and more central banks desperately trying to curb currency strength. We had Brazil act a few days ago, now we’ve had Switzerland and Japan.”
(FLASH)
“It’s not really a surprise to me that every one’s just saying, ‘Let’s cut back risk, across the board, every currency. I don’t care about fundamentals anymore. I just want liquidity.’”

And the race is on. No sooner had the Swiss and Japanese acted...more players jumped in.

According to the Bloomberg....

“South Korea’s government is reviewing ‘all possibilities’ on curbing capital inflows, The Philippines is prepared to impose controls to cap volatility in the peso after its currency rose to a three-year high this week…Turkey’s central (bank says) it will sell dollars to banks when it sees it’s necessary to support foreign exchange liquidity in the domestic market.”

So -- no one wants to be considered a safe have right now. Driving up currency values in this world economy -- could be a poison pill. A critic for the Financial Times says, currency devaluation may not be a good solution to all that ails nation’s economies, but right now, it seems unavoidable.

“… from a domestic industrial point of view -- remember, that’s what they care about is the employment, the exports, the standard of living -- it’s a terrible thing to have an unreasonably strong currency.”
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“I suspect it would be even worse if they didn’t try. So I think we are making a good effort against a very unfavorable world and I think the end of this is going to be a lot of currency war.”

A writer for The Wall Street Journal says, these central banks efforts are limited, because there’s a very strong tide moving away from the dollar -- and in the direction of the Swiss franc and Japanese yen.

“U.S. economic data has proved even worse than expected, increasing pressure for more monetary easing and casting even more doubt on the ability of the global economy to recover… This made the yen even more popular as a safe haven and the Bank of Japan.”

Just eight months ago, Brazilian Finance minister Guido Mantega declared a “truce” in competitive currency devaluations. What triggered the downward valuation again? The Economist says -- Fear.

“I have called this process ‘pass the deflationary parcel’… the parcel contains a bomb rather than a treat. Countries need to get rid of it before the music stops… In a slowing global economy, marked by the rise of low-cost titans like China, developed countries are competing for market share. So the last thing they need is a steadily appreciating currency.”
 
Finally, on The Telegraph, a opinion piece warns, economic confusion could lead to a second Great Depression.

“The way things are going, protectionism won’t be far behind. The fiscal canon is exhausted and policymakers are struggling to find alternatives. Not since the deepest days of the banking crisis, when we were looking into the abyss of a second Great Depression, have things looked so scary. Policy seems impotent before the storm. ”
 

Transcript by Newsy.