Has Super Mario Brokered a Currency War Ceasefire?

It has been a brutal race to the bottom for currencies. And there have been very few winners as economies remain bruised and battered after interest rates were slashed, the lower bound tested through negative deposit rates and monetary policy re-written to explore more inventive options.

But in the latest chapter, as Europe’s central bank gets more abstract, action has swung to credit easing rather than the hefty burden born by rate cuts This maybe, just maybe, could signal the end of the road for not only negative rates but currency wars.

The European Central Bank President Mario Draghi served up what is thought to be the final rate cut in Europe for this economic cycle, taking the deposit rate to -0.40 percent. At the same time, he slammed the door shut on an even deeper foray into negative rates. The euro’s haywire 4 euro cents move in one session last Thursday reflected changing market perceptions about interest rate differentials and fair value for the euro.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam