A nation's currency is only as good as the confidence its citizens and external trade partners have in its value and solvency. Nations that value a strong currency will experience low inflation, but can expect a trade deficit in the buying and selling of goods. While those who depend upon export and trade as the lifeblood of their economies, will allow or manipulate their currencies lower, so their goods will be cheaper on the global markets.
Beginning in January of 2013, the recognition of a global economic slowdown, similar to what took place in 2007 that led to the global credit crisis, is once again on the horizon, and is now affecting many more developing nations. In response to this economic slowdown, and pullback on export sales, seven countries, starting with Japan on Jan. 21, have introduced new monetary policies to devalue their currencies. In what is being known as the currency wars, the nations of Japan, Germany, the United Kingdom, Iran, Taiwan, South Korea, and China are all in one form or another, devaluing their currencies in an attempt to be the first to reach the bottom.