The global currency wars are heating up again as central banks embark on a new round of easing to combat a slowdown in growth. The European Central Bank cut interest rates last week in a move some investors say was intended in part to curb the euro after it soared to its highest level since 2011. The same day, Czech policymakers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it might delay rate increases to temper its currency, and Australia warned its aussie was "uncomfortably high." "It's a very real concern of these countries to keep their currencies weak," said Axel Merk, who oversees about US$450 million of foreign exchange as the head of US-based Merk Investments. ECB president Mario Draghi, "persistently since earlier this year, has been trying to talk down the euro", Merk said. With the outlook for the global economy being downgraded by the International Monetary Fund and inflation slowing to levels that could hinder investment, countries and central banks are revisiting policies that tend to boost competitiveness through weaker currencies. The moves threaten to spark a new round in what Brazil's Finance Minister Guido Mantega in 2010 called a "currency war", barely two months after the Group of 20 nations pledged to "refrain from competitive devaluation". "We're seeing a new era of currency wars," said Neil Mellor, a foreign exchange strategist at Bank of New York Mellon in London. The ECB lowered its main rate on November 7 by a quarter-point to a record 0.25 per cent, a move anticipated by just three of 70 economists in a survey. Draghi said the cut was to reduce the risk of a "prolonged period" of low inflation and the euro's strength "didn't play any role" in the decision. Euro-region consumer-price inflation has been below the ECB's 2 per cent ceiling for the past nine months. The euro fell as much as 1.6 per cent against the US dollar on the day of the rate cut, the most in almost two years, before ending the week at US$1.3367. The shared currency pared its gains against a basket of nine developed-market peers this year to 5.5 per cent, from as much as 7.2 per cent at its October 29 peak, Bloomberg Correlation-Weighted Indexes show. "There are places in the world where economies are generally quite weak, where inflation is already low," said Alan Ruskin, the global head of Group of 10 foreign exchange in New York at Deutsche Bank, the world's largest currency trader. "Japan was in that mix for 20-odd years. Nobody wants to go there" and "the talk from Draghi shows they're taking the disinflation story very seriously. The Czech Republic is the same story." The Czech National Bank drove its koruna down by 4.4 per cent to the euro on November 7, the most since the single currency's creation in 1999, when it intervened to spur inflation. Governor Miroslav Singer pledged to keep selling koruna "for as long as needed" to boost growth. The IMF last month cut its forecast for global economic growth to 2.9 per cent for this year and 3.6 per cent next, from July's projected rates of 3.1 per cent and 3.8 per cent. It also sees inflation in developed economies remaining short of the 2 per cent rate favoured by most central banks. It’s a very real concern of these countries to keep their currencies weak AXEL MERK, MERK INVESTMENTS Growth in global trade might slow to 2.5 per cent this year, the new head of the World Trade Organisation said at a September summit of G20 nations in Russia, down from the organisation's previous estimate in April of 3.3 per cent. Even so, the participants agreed to "refrain from competitive devaluation" and not "target our exchange rates for competitive purposes". "The idea that central banks are setting policies to weaken their currencies has always been overstated," said Adam Cole, Royal Bank of Canada's London-based head of G10 currency strategy. "In most cases they're happy to see their currencies fall, but they're not going out of their way to induce weakness." German airline Deutsche Lufthansa cited the strong euro last month when its profit estimate fell short of analysts' forecasts, while French luxury-goods maker LVMH Moet Hennessy Louis Vuitton said its gains against the US dollar and Japanese yen shaved 6 per cent off third-quarter revenue.