China: Why it was not going for REVALUATION for its CURRENCY
Date Submitted: 09/10/2006 01:48:21
Category: / Science & Technology / Transportation
Length: 5 pages (1350 words)
Category: / Science & Technology / Transportation
Length: 5 pages (1350 words)
Pressure on china to revalue its currency was mounting. EU and even Japan to pressurized China to revalue its currency had joined U.S. Recall that china received plaudits during the Asian crisis for maintaining stable exchange rate policy and avoiding competitive devaluation. Then, why Chinese currency was now blamed for global imbalances?
World's dependence on US for growth has been increasing and it played disproportionately larger share in world growth throughout 90's. Japan has …
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…to fall by around 30% to bring CA deficit to sustainable level. Neither Euro nor Yen are in position to bear such large appreciation. Thus, appropriate dollar depreciation will be frustrated, if the Asian economies do not do their part on currency appreciation. China has weight of nearly 10% in dollar trade weighted index. Chinese Yuan, thus will have to play major role in dollar correction in future even though it appreciated to make it to 8.11 from 8.28,
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