'Currency War' is a situation in which countries indulge in:

The correct answer is Option (4) → Devaluing their respective currencies

A currency war (competitive devaluation) is a situation in which countries deliberately push down the value of their own currencies against others. A cheaper currency makes a country’s exports cheaper abroad and its imports dearer, so each country tries to gain trade at the others’ cost, and the others respond by devaluing too.