ECB’s Nowotny Says Trade War Could Morph Into Currency War

(Bloomberg) — The global trade war has the potential to affect exchange rates, leading to additional negative consequences, according to European Central Bank Governing Council member .

“What we just see now is that we have quite interesting effects with regard to the exchange rates,” Nowotny said during speech in Zurich. “Which means that in addition to the trade war, we might have something like a currency war. Even if it is not an intentional war. But it might have effects that are much more heavy than if you just look at the tariffs.”

The world’s two biggest economies have each fired their first shots in what China has called “the largest trade war in economic history.” Higher tariffs on $34 billion of both nation’s goods began on Friday, with levies on another $16 billion likely to be unveiled in a few weeks.

“It’s very difficult to predict what will be the outcome,” Nowotny said. “If you look at what we have just now, it would not be dramatic. But of course it has potential that it might escalate.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.