This was also alerted at the last meeting of the G-7. The truth of all This, is that inflationary pressures in China will force authorities to continue the policy of rate hike (in 2007, rose in six opportunities interest rates), and accelerate the appreciation of the yuan. Precisely the need for an accelerated appreciation of the yuan represents good news for the United States.UU. Since it generates an improved competitive that it is vital in these moments where aggregate demand in the north country is weakened. It may be then, that the appreciation of the Chinese currency, a double effect is achieved: attenuate inflationary pressures through the exchange rate anchor and, as this implies a lowering of the products China imports from the USA.UU., the American economy would benefit through an increase in external demand. This would represent a very good news for us.UU. at a time where the authorities are less optimistic (the Fed yesterday cut half a point growth prospects by placing it between 1.3% and 2%) and where the rate of higher than expected inflation, threatens to the continuity of the process of trimming rates. I must warn that there is an obstacle that can make Bank of China want to soften the pace of appreciation of its currency in the process of yuan appreciation and consistent in the bet of speculative investors looking to benefit betting on china’s currency.
You will have to wait to see how the Chinese authorities handled this threat. Poor Cheng! I understand your concerns. But at least here in Argentina, with high inflation, price controls and an artificially undervalued exchange rate, will not surprise too to his native country.
