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Re: the fed and the yuan



Jonathan writes: >I just can't figure out why there's suddenly a unanimous call for
revaluation. Especially since foreign firms account for such a significant
portion of exports from China (more than half I think).<

as should be well-known, the falling dollar boosts the US economy at the expense of Europe and other major trading partners with floating rates. But with a fixed yuan/dollar exchange rate, the falling dollar also means that China gains at the expense of Europe and other areas with currencies rising relative to the US dollar. The US -- and other dollar-holders -- don't gain from this, however. 

all of this encourages fears of deflation.

Jim

 



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