The dollar has risen to multi-year highs against a range of currencies in recent weeks, including a 12-year peak against the euro Monday.

 

The skirmishes carry danger for the global financial system, writes Telegraph columnist Liam Halligan.

 

"The world's leading economies have reduced themselves to blatantly competing less on the quality of what they produce than on the speed with which they can depreciate their currencies against one another," he says. "The lessons of history are that such situations are prone to escalate into rancor and, ultimately, conflict."

 

Halligan spells out some dire ramifications.

 

"The longer profligate eurozone governments are able to ramp up borrowing, the more likely monetary union is dramatically to implode. And the further share prices are pumped up by QE [quantitative easing] and other monetary mutations, the more vulnerable global stock markets are to crash."

 

The dollar's strength isn't exactly doing wonders for the U.S. economy and American companies.

 

"We are in a midst of an ugly contest to see whether the eurozone, Japan or Canada can depreciate the most against the U.S. dollar, and China is probably next," Campbell Harvey, a finance professor at Duke University and a past guest on Newsmax TV, said in response to the latest Duke University/CFO Magazine Global Business Outlook Survey

 

"U.S. exporters are being punished by these competitive depreciations, and this will lead to lower profits and less employment."

 

A rising dollar hurts U.S. companies by making their exports more expensive in foreign currency terms and reducing the value of their foreign revenue when translated into dollars.

 

Many companies have recently cited the dollar's ascent as a depressant on earnings. "Foreign exchange is now a substantial headwind for us," John Kritzmacher, CFO of book publisher John Wiley & Sons, said in an earnings call last week, The Wall Street Journal reports.

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