Sunday, April 17, 2005
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So did the Bush administration get serious about the dollar?
Well, the meeting of the G-7 finance ministers happened. Did the U.S. and the G-7 ratchet up the pressure on China, as was previously suggested?
This appears to depend on who you ask. In the Washington Post, Paul Blustein says "no":
In this case, both the FT and WaPo are correct. It's clear that the latest G-7 statement doesn't differ much from previous ones, and I have no doubt Japan acted as the brake on any change in the language. However, U.S. Treasury Secretary John Snow also delivered a statement after the communique that was reasonably clear in its intent:
Of course, the U.S. can insist that China is ready all it wants -- whether Beijing will hop to is another question. Until and unless Japan changes its tune, it would appear that China doesn't face a huge incentive to change the status quo.
On the other hand, this Bloomberg report by Tim Kelly suggests that Japan recognizes the political lay of the land:
Developing....posted by Dan on 04.17.05 at 09:28 PM
First, would someone PLEASE decide which is the correct term for Chinese currency. Sometimes I see it referred to as the yuan, other times as the renminbi.
More to the point, if China decides to revalue its currency, wouldn't it be prudent for them to first dump their dollar reserves then make an appropriate revaluation based on what the dollar is really worth?posted by: p.lukasiak on 04.17.05 at 09:28 PM [permalink]
p.lukasiak, RMBY, or Renminbi Yuan, is the full currency name. In Chinese, "yuan" is a generic term for money, whereas "bi" is currency and "Renmin" means People's. Most Chinese simply say "yuan" much as most Americans simply say "dollar" instead of USD.posted by: Cloud on 04.17.05 at 09:28 PM [permalink]
So, who's going to bell the cat?
Wouldn't the "appropriate revaluation" be to let the market decide the when/where/how much your currency should be worth? I think that no matter how well formulated, calculated, and designed, when you get to say how much your money is worth, those of us who aren't you would have questions, concerns, and/or risk adversion.posted by: Gaijin on 04.17.05 at 09:28 PM [permalink]
Gaijin, the chinese are hoarding dollars and driving up the price. Would you say "let the market decide" how much a commodity is worth when someone is cornering the market?
If it was just that the chinese put an inordinate value on dollars and will at some point find they can't sell them and must lose half the money they put into them, then it wouldn't be such a big deal. Caveat emptor. But their market distortion is hurting us too.
I don't see any market solution to this.
p.lukasiak made the comment about dumping the reserves they had to make an "appropriate reevaluation". However, I think that any arbitrary currency value that isn't subject to market forces would keep us where we are--with a varying degree of edge/risk. It may lessen the problems now, but it is still some Chinese men sitting around the table telling the world what their funny money is worth.
Whether it is 8.x Yuan/Dollar or 25 Yuan/Dollar, there isn't any fair amount of reflection of economic/political influence on its value.posted by: Gaijin on 04.17.05 at 09:28 PM [permalink]
Letting their currency float would mean dumping dollars.posted by: fling93 on 04.17.05 at 09:28 PM [permalink]
What about the China Currency Act?posted by: dan on 04.17.05 at 09:28 PM [permalink]
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