At the Southeast Asian conference in late 2009, President Obama sought to convince the Chinese to revalue their currency which has been pushed down in order to keep exports cheap. As a result of this it has become increasingly difficult for nations with stronger currencies to stay competitive with their export prices. President Obama broached this point, asking China to consider the state of the global economy, but the government made no move to allow the yuan to rise. By the end of this year though, that may change.
The yuan has been attached to the dollar for almost three years under the demands of Chinese leadership, putting the currency at a level between 20 and 40 percent beneath where it would be were it traded freely. The consequence of this is an exaggerated trading gap between the US and China and the depletion of American manufacturing jobs.
The Chinese are known for being internally minded, making them unwilling to allow the yuan to rise in order to push the global recovery forward. By the end of this year; however, permitting their currency to rise may serve their own purposes.
Or at least that is what some economists believe. Currency and policy analysts appear mixed on their Chinese predictions with some, forecasting that growing inflation will implore China to raise the currency as much as 15 percent by the close of 2011.
Others though disagree with this notion and believe China will pursue other means to curb inflation, for instance, once again tighten credit at banks. Early this year Chinese leadership increased the minimum amount Chinese lenders were expected by law to have in the reserves. The global markets responded unfavorably.
About EQUITIES:
Since 1951, EQUITIES Magazine has been a leading media company providing business editorial content designed to serve the needs of business leaders, professionals, institutional investors and retail investors. We are focused on business and the business of making money, not on lifestyle subjects. We publish original reporting in print and on our website, as well as select content at www.nasdaq.com. For 28 years we have hosted our own branded investor conferences that connect public company CEO’s with our loyal readers in the investment community.
Sign up for a free one-year subscription
