Last Friday, we had a spirited discussion about the US Senate’s currency appreciation bill. Here’s the hit.
Yesterday, the US Undersecretary for International Affairs (who is charged with formulating US dollar policy), Lael Brainard, stated ” Renminbi appreciation on its own will not erase our trade deficit.” While it’s unusual to get a direct refutation of this theory by the administration, the comments reflect what is well known at the US Treasury: a stronger currency doesn’t solve the issue of the US-China trade imbalance. The experience of the massive appreciation of the Japanese yen and its failure to significantly reduce … …READ MORE
Tag Archives: Chinese yuan
Money in Motion makes the call on Yuan:
Yuan is the Word
http://www.cnbc.com/id/39150215
The Chinese currency has had a big move since the beginning of September. The renminbi or yuan has appreciated over 550 points moving from 6.8175 down to 6.7618. This is a larger move than what happened in June when the Chinese pledged to allow the currency to reflect economic fundamentals. Why is this occurring?
Some of the move can be explained by the recent spate of positive Chinese economic data. In August, the global equity markets were unsettled by the unexpected drop in Chinese imports and the concern was that Chinese growth was slowing. In September, these fears have … …READ MORE
Good Stress Results, IMF says Yuan Undervalued, the CAT Eff
IMF Says Yuan Undervalued: In a less than helpful statement, the IMF emphatically declared that the Chinese currency was “substantially undervalued.” However, the IMF did not say by how much and their full report may never be released to the public. Unless China allows, the IMF will not be able to publish their findings. The announcement of the undervaluation will likely bring heavy pressure from Europe and the US on the Chinese to allow the yuan to appreciate faster.
The CAT Effect in Shipping: Following up on my point from yesterday, both FedEx Corp and UPS raised profit forecasts in … …READ MORE
The Chinese Writing on Higher Global Yields
Last night, an economic advisor to the People’s Bank of China, Fan Gang, suggested that China may resume a “managed float” of the yuan. He said that a return to the pre-crisis structure may happen particularly if the uncertainty over the economic recovery diminishes. Fan warned against a one time revaluation as it would pose an economic danger to both China and the United States. Fan Gang is a professor of economics at Beijing University, director of China’s National Economic Research Institute and a member of the PBOC’s monetary policy committee was writing in an opinion piece published by the … …READ MORE
US Health Care Bill a Concern for the Chinese
Over the weekend, China’s chief banking regulator sharply criticized the US Federal Reserve and the monetary policy of the United States. Liu Mingkan said that the U.S. Federal Reserve’s promise to keep U.S. interest rates at extraordinarily low levels for an extended period “has already led to a massive U.S. dollar carry trade and massive speculation.” He said that the weak U.S. dollar and low U.S. interest rates are creating “unavoidable risks for the recovery of the global economy, especially emerging economies” and that the situation is “seriously impacting global asset prices and encouraging speculation in stock and property markets” … …READ MORE
Obama Focus on Far East
US Treasury Secretary Tim Geithner has been hitting the air waves and the editorial page during his trip to the APEC conference in Singapore. From Bloomberg to CNBC, Geithner has been consistent in stating that it’s very important the US maintain a strong dollar. However, he is advocating the opposite for the Asia-Pacific nations.
In an editorial in the Asian WSJ with the finance ministers of Indonesia and Singapore, Geithner said. “Market-oriented exchange rates in line with economic fundamentals will be essential in assuring the resource and sectoral shifts to match and foster the new patterns of demand.” Clearly, they … …READ MORE
