Tuesday, May 03, 2011

China Currency

"So far, there has been no announced change in China’s currency policy. But the People’s Bank of China allowed the currency to rise more quickly in April than previous months, and on Friday set its target level for the yuan at 6.49 — the lowest since the early 1990s."

Well, its been trading at 6.53 for a long time...how much lower is 6.49 in percentage terms?

Less than 1% different. Yawn. Major currencies are swings around like a bunch of drunks playing crack the whip, and the RMB just slowly, ever so slowly appreciates.

But there is a glimmer of light at the end of my speculative tunnel...

'Meanwhile, officials from the People’s Bank of China have begun speaking in public about using the exchange rate as a way to control inflation — an approach that top Chinese officials have in the past tried to minimize. Monetary policy committee member Xia Bin said in a news Web site interview that rising prices might require a “one-off” jump in the value of the renminbi as well as “long-run, gradual appreciation.”

It is “a must,” he said, “unless we don’t want the economy growing ... and don’t want internationalization.”'

Dude, did I just see an actual monetary official say they may need a "one-off" AND gradual appreciation? SWEET.

I guess I need to apply this to Taiwan a bit...if the RMB appreciates, most likely the NTD will match it. Good news for teachers sending money back home and people who buy imported beer. Potentially bad for exporters.

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