Re: the fed and the yuan (and yen)

[Jonathan Lassen <jjlassen@xxxxxxxxxxxxxxxxxxx>]

Jim,

Thanks for your response. But if it's in the US' interest to devalue the
dollar relative to other currencies, then why is the US willing to allow
Japan to intervene to prevent the yen from appreciating?
(http://www.nytimes.com/2003/07/19/business/19EURO.html - as if China's not
going through a 'tough set of things') Is it Japan/US vs. EU/China? The
greater current account deficit with China?

Also, how does the fact that Japan-China-Hong Kong together have about 800
billion dollars in US denominated reserves fit into the picture?

Curious,

Jonathan


 At 11:53 2003-7-20, you wrote:
> 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