Should China revalue its currency?
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This entry was posted on Friday, December 25th, 2009 at 4:48 am and is filed under Currency Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
December 25th, 2009 at 4:48 am
it’s a tough call for them and will affect american commerce. They need us as much as we need them and they will decide in their own best interest, not ours.
December 25th, 2009 at 4:48 am
Depends how you define "should".
Morally it shouldnt, raising the price of the Yuan now would send catastrophic ripples across the globe as many countries import cheaper, more economical Chinese products, and making them more expensive would drive people further into debt and poverty. (Also dont forget that China wants people to buy its products, making it too expensive would be detrimental to both the buyer and the seller) Also raising the price of the Yuan would make China’s buying power in relation to ore purchase, company takeovers etc increase hugely, and overall would take much of the competition out of the global market which would be bad for both China and the world in the long run
Legally it should because of its stabilising economy but because of the reasons above the government has suppressed such fluctuation to wait for the rest of the globe to get back on its feet before adjusting the price accordingly.
December 25th, 2009 at 4:48 am
China currently ties the value of its currency to the US Dollar to preserve the exchange rate. Many, including our government, believe this is harmful to us and want China to allow its currency to "float" in the market on its own.
It is correct that the Chinese policy is harmful to the US economy in the current situation, but this is a short term circumstance. It could easily be the reverse. The fact is that having the world’s soon-to-be #2 currency tied to the dollar only strengthens the dollar’s position in the long run.
Short term pain for long term gain.
December 25th, 2009 at 4:48 am
Better now than later
Longer they wait, the deeper we will be in the hole.