U.S. Treasury Secretary Timothy F. Geithner’s unscheduled meeting with Chinese Vice Premier Wang Qishan in Beijing on April 8 fanned speculation that the yuan may strengthen after being held at about 6.83 per dollar since July 2008. American lawmakers have stepped up calls for an end to what they label an unfair subsidy.
The Yuan has been stable since 2008. But the yuan isn't manipulated. Please.
1 comments:
OK, I finally get a chance to ask this in a relevant context: Just HOW do you muck with an exchange rate?
On one hand, it's certainly possible to muck with a money supply. Zimbabwe is an extreme example, but in the case of the U.S., well, manipulating the money supply is de facto the Federal Reserve's job.
But an exchange rate? OK, a government can insist on honoring an artificial exchange rate, and I'm sure China micromanages their domestic markets, but let's say some money market fund decides to buy some yuan. Once the currency leaves China, what's to stop a fund manager from buying/selling the currency for whatever the international market will bear?
I'm trying to think logically here, but it seems to me the only result of "manipulation" would be some control (as China's central bank would remain the biggest currency trader) but it'd take an awful lot of micromanaging to keep prices stable on the international market. Even if the money supply is kept stable and the currency pegged by the central bank, on the open market people will find a way to appraise the currency.
Post a Comment