Food prices bash as currencies clash

To laymen, a currency note is simply a means to buy some things. But to governments and central banks, its a significant tool for economic management, as is being witnessed in the form of roller coaster rides some currencies have been taking over the past few weeks.
Where the US and China have been involved in a tussle over the slow appreciation of the Yuan, the Bank of Japan lowered its interest rate yesterday to a narrow band of 0-0.1 percent in a bid to fight the rise of the Yen.
Joining the bandwagon of currency-panicked nations are Switzerland, Brazil, Taiwan and South Korea, which have been intervening off late to hold their currencies down.
The Institute of International Finance (IIF), which represents more than 420 of the worlds leading banks and finance houses, warns that ultra-low monetary policy in rich countries is rapidly driving money into the emerging markets in search of yield, risking destabilization.
But theres also another crisis looming ahead which puts to question the extent to which these economies can continue to protect their currencies - that is the food crisis.
World Bank president Robert Zoellick has rated the recent hike in food prices as a serious cause of concern.
Several developed economies, such as Japan, South Korea, Switzerland, and Taiwan are largely dependent on food imports. Consequently, import costs are likely to increase further as food prices maintain their rising momentum.
Continued currency appreciation, thus, will not reap positive results for the trade balances of these food-importing countries, which ultimately will have to facilitate a rise of their currencies.
Media reports have cited economists as predicting that dry weather spells in China might tip it towards food imports in the next 15 odd years, even though its food supply and demand is relatively stable at the moment.
Robert Zoellicks claim that he does not foresee a currency war seems quite logical; food price hikes and consistent pressure from the IIF are likely to weigh down on further interventions to protect currencies from an appreciation.
Given this scenario, how far will countries be able to stretch interventions to prevent an appreciation? Only economic managers prudence will determine the answer to this question.