Weakening national currencies can lead to global currency war - Rosneft chief

A global conflict with “unpredictable consequences” could be triggered by further depreciation of national currencies, the US-China trade war and US sanctions against oil producers, the head of Russia’s biggest oil company said.

A global currency war could even plunge the world into recession, warned Rosneft CEO Igor Sechin, speaking at this year’s Eurasian Economic Forum in Verona, Italy. He added that the global economy has never faced such a combination of threats, while the markets underestimate the risks of instability.

“Further steps to weaken national currencies increase the likelihood of a global currency war with extremely unpredictable consequences,” Sechin said.

A number of countries have had to depreciate their currencies and lower interest rates, including India, Thailand, New Zealand and China. Beijing was recently labelled a “currency manipulator” by the Trump administration, Sechin said, adding that weakening monetary policy and lower rates, together with the trade spat between the two world’s largest economies and US sanctions against oil producers, may also increase the risk of recession.

Sechin accused Washington of attempting to benefit from the state of the global economy and called for a rethinking of the status of the greenback as a reserve currency.

“As the US manipulates interest rates and takes advantage of the state of the world economy, it is necessary to ask ourselves once again - should the dollar be the global reserve currency? Can we rely on the US as a source of stability of the global economy and energy in the current environment?” he said.

Sechin noted that the US may take new steps to “make America great” as it continues to “extensively” inject billions of dollars into the global economy. Last week, the US Federal Reserve announced plans to purchase $60 billion of US Treasury bills.

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