Part of International Relations — Global Issues. Common notes for UPSC Mains GS-II.
UPSC
📌 Background & Key Features
Concept: Competitive currency devaluation by nations to boost export competitiveness, often triggered by, or in retaliation to, trade-war tariff measures.
2025-26 dimension: US tariff aggression has revived "currency manipulator" accusations against trading partners; simultaneously, BRICS’ push for local-currency trade settlement (to reduce dollar dependence) is framed by critics as a quasi-currency-war move, though it stops short of a coordinated devaluation strategy.
India’s position: The Rupee has faced periodic depreciation pressure amid tariff shocks and capital outflows; RBI has intervened to manage volatility without engaging in competitive devaluation.
📰 Current Affairs Linkage (2025-26)
Gold prices surged past record highs (over $3,300/ounce in 2025) as investors sought safe-haven assets amid tariff-driven uncertainty — a classic symptom of currency/trade-war anxiety.
India continues to expand Rupee-based trade settlement mechanisms with partners like Mauritius and Russia, part of a broader, gradual de-dollarisation trend without officially joining any "currency war."
