A Currency Lesson
American manufacturing executives Tuesday urged the US government to get tougher with China on exchange rates, claiming the modest rise in the yuan has done little to ease the massive US trade deficit.
“We voiced our concerns on how to best deal with this issue, notably pressing for faster appreciation of the yuan in this month’s Strategic Economic Dialogue and further enforcement of international agreements.”
“The necessary appreciation of China’s currency has not occurred,” Campbell said, noting that China foreign currency reserves have now reached 1.2 trillion dollars.
I thought it was interesting that the way that China is holding down the value of their currency is by holding onto a LOT of dollars.
Of course the biggest loser in China’s undervaluing their currency is the people of China. The winners would likely be the American consumer. Still artificial influences in the market always turn out badly and we should keep the pressure on to get them to let their currency float in the market. It’ll be better for the Chinese people and in the long run the American people.
This is one area of economics I wish I understood better.












