In the face of rising inflation, emerging economies should be lifting interest rates, not cutting them, but their rigid currency policies make this hard.
The most pressing monetary needs moving forward would seem to be "second generation" reform of currency policies to make them more supple and capital controls that improve "crisis proofing".
If China continues its beggar-thy-neighbor currency policy, it will make it even harder for countries and the global economy to revive.
Beijing's currency policy has helped make Chinese exports more competitive, but it has angered countries that have large trade deficits with China or that have been losing foreign markets to China — notably the United States, Southern Europe, India and Southeast Asia.
The effect of China's currency policy is to make its goods cheaper, but federal rules restrict Commerce's ability to respond as forcefully as in other instances in which a government underwrites exports.
American officials have long contended that China's currency policy has the effect of making Chinese exports to the United States cheaper, and American goods flowing to China more costly, than they otherwise would be.
So let me try to make it clearer: I don't buy the argument that China is hamstrung in its ability to make trade or currency policy by its citizens' nationalism.
He begins his reponse by saying:I don't buy the argument that China is hamstrung in its ability to make trade or currency policy by its citizens' nationalism.
He deflected questions about the value of the South African currency, the rand, which has fallen sharply, other than to repeat that good economic and fiscal policies made for resilient currencies.
An undervalued currency always promotes trade surpluses, and China is no different.I would love to see who is making this argument, that China's trade surplus has nothing to do with its currency policy.
