In the February economic update video for eZonomics, ING head of macro and consumer economics Maarten Leen says 2013 had started of “pretty well” with share markets in many places up and better indications coming from debt-troubled countries in Southern Europe. But it was too soon to “get carried away”.
Talk of “currency wars”
Leen said the first of four key reasons was the term “currency war” being heard more and more in foreign exchange markets. In a currency war, countries would compete with each other by lowering their exchange rate. The fear is that such a development could trigger retaliation by other countries and in turn lead to a general decline in international trade and harm all countries.
Fiscal cliff and Europe
The other key factors that may also have implications for market sentiment at large were on-going “fiscal cliff” discussions in the United States, political developments in Spain and Italy and, finally, the outcome of Europe’s negotiations with Cyprus on financial help.