The central banks of Japan, the United Kingdom and the European Union have promised to maintain their current policies, but this has not alleviated risks for a currency war, analysts say.
Given that Haruhiko Kuroda, the nominee for Japan's central bank chief, advocates a looser monetary policy to fight deflation, the market expects Kuroda to take aggressive easing action after he takes office in April.
In the United States, a contraction in the Federal Reserve's asset purchase program will not come any time soon, as Fed Chairman Ben Bernanke has repeatedly signaled that the U.S. central bank will maintain quantitative easing until there is a substantial improvement in the labor market outlook.
Zong Liang, deputy chief of the Strategic Planning Research Institute under the Bank of China, said a currency war is brewing as the global economy continues its struggle to recover.
"What the world will encounter may not be a head-on currency confrontation by major economies, like in the Great Depression of the 1930s. But a competitive currency devaluation will come in a stealthy way," said Zong.
Liu Junhong, director of the Globalization Center with the China Institutes of Contemporary International Relations, named Japan as a possible powerhouse of competitive currency devaluation.
Since Shinzo Abe assumed his role as Japan's prime minister two months ago, the Japanese yen has depreciated more than 15 percent against the U.S. dollar.
Liu says Japan's central bank may purchase more assets, including stocks, government bonds, corporate bonds and commercial bills, and advance its open-ended asset purchase programs to beat deflation.
The Federal Reserve is another policy weathervane. It will look to American economic growth to decide whether or not to contain its quantitative easing, according to Liu Jisen, deputy secretary-general of the Guangdong Research Institute for International Strategies.
In Europe, the grim outlook of the sovereign debt problem has also boosted market expectations for looser monetary policies.
