Bloomberg (March 8)
“China’s second interest-rate cut in three months has raised fears that the government is trying to devalue the yuan to give its exports an unfair boost — an understandable suspicion.” In this case, however, “lower interest rates and a moderately weaker yuan make sense not just for China but for the rest of the world as well.” These factors should help Chinese leaders achieve their “soft landing” growth target of 7%. “The rest of the world no less than China needs this soft landing to be smoothly accomplished.”
Tags: China, Devalue, Exports, Government, Growth, Interest rate, Soft landing, Yuan
Wall Street Journal (December 9)
Many still blame an artificially high yuan for ongoing economic woes in the U.S. Markets say otherwise. “The yuan has traded at the softer edge of the narrow band around which Beijing allows its exchange rate to fluctuate, notwithstanding Beijing’s effort to push the reference rate stronger.” Other facts also point to an overvalued, not undervalued, Chinese currency. October marked China’s first net outflow of capital since 2007. Wealthy Chinese, importers and exporters are increasingly retaining dollars or moving money offshore. “Insiders are wary of the currency’s—and the economy’s—near-term future.”
Wall Street Journal (June 2)
The yuan is quietly becoming a global currency. 7% or $55 billion of China’s first quarter trade was conducted in yuan. Yuan deposits in the Hong Kong banking system rose to 511 billion ($79 billion) on April 30. As restrictions loosen, a global yuan looks more likely and this will spell change. “A yuan that’s more widely used in international trade and investment could eventually challenge the dollar’s supremacy, correct some of the imbalances that plague the Chinese and global economy, and force a profligate U.S. to live within its means.”
Tags: China, Global currency, Hong Kong, Settlement, U.S., Yuan
The Wall Street Journal (June 20)
China will move toward a more flexible exchange rate, dropping the yuan’s dollar peg. This announcement comes at a good time, ahead of the G-20 meeting. This means the exchange rate won’t overcloud the major issue: “the failures of U.S. and European economic policies.” The WSJ points out the revalued yuan will not be the silver bullet that solves these problems.
China will move toward a more flexible exchange rate, dropping the yuan’s dollar peg. This announcement comes at a good time. Ahead of the G-20 meeting, this means the exchange rate won’t overcloud the major issue: “the failures of U.S. and European economic policies.” The WSJ points out the revalued yuan will not be the silver bullet that solves these problems.
