Over recent days, US President Donald Trump has accused China and the European Union of "currency manipulation", leading economists to suggest that the trade war initiated by Washington is now morphing into a currency war. However, any allegations of currency manipulation are highly suspect. The yuan and the euro have indeed depreciated against the US dollar in recent months. Since early February, the yuan has declined by about 8 per cent against the greenback, and the euro by about 6.4 per cent.

However, many other currencies have also softened against the US dollar, including the Japanese yen, the Korean won, the Singapore dollar, the Malaysian ringgit and the Indian rupee. This suggests that rather than countries manipulating their currencies to weaken them, what we are really witnessing is the strengthening of the US dollar - and for good reason.