What impact will the "currency war" have on agricultural markets?

Over the past few weeks, the "currency war" – as the Brazilian Minister of Finance called it – has been at the heart of global current affairs. Against the backdrop of a general return to economic growth, the leaders of rich and emerging countries are accusing each other of deliberately weakening their currencies so as to boost exports.

Both Japan and Brazil have taken steps to lower their base rates and so curb the rise of their currencies. China, for its part, is still refusing to revalue the yuan. But it is especially the collapse of the dollar, that the American authorities seem in no hurry to counter, that is causing fears of impending large-scale turbulence on international markets, and especially on agricultural markets. Steve Hanke, Professor of Economics at John Hopkins University in Baltimore, has warned that "the US wants a weak dollar, which implies higher prices for raw materials".

At a time when the FAO’s Committee for World Food Security is expressing concerns about world hunger, it is urgent to avoid any such currency war. For in addition to the possibility of another major economic crisis, it would result in further increases in food prices in emerging countries, with all the attendant social consequences one can easily imagine.