Posted on 04/15/2012 12:17:30 AM PDT by bruinbirdman
China took a major step closer to turning its yuan into a fully tradable global currency today, by doubling the range by which it is allowed to rise or fall against the dollar.
The People’s Bank of China said that from Monday it will double the trading band, so that the yuan can fluctuate by 1pc every day from a mid-point, compared with its previous limit of 0.5pc.
The move demonstrates Beijing’s belief that the yuan is now stable enough to handle major structural reforms, despite slowing growth of the Chinese economy.
Analysts said the slowdown may have actually spurred Beijing to make the change, because the Chinese government knew it could introduce the larger band without causing a spike in the yuan’s value.
"The central bank chose a good time window to enlarge the trading band. The market's expectation for a stronger yuan is weakening," said Dong Xian'an, chief economist at Peking First Advisory in Beijing.
Nonetheless, The People's Bank of China took the unusual step of issuing its announcement in English rather than Mandarin.
Sources said China wanted to deflect criticism of its currency policy ahead of the International Monetary Fund's annual spring meeting in Washington next week.
IMF managing director Christine Lagarde supported the move today. She said:
"I would like to welcome this important step by the People's Bank of China to increase the flexibility of their currency.
"This underlines China's commitment to rebalance its economy toward domestic consumption and allow market forces to play a greater role in determining the level of the exchange rate."
According to data released by the National Bureau of Statistics on Friday, China’s economy grew at its slowest rate in nearly three years in the first quarter of 2012.
The country’s annual rate of GDP growth
(Excerpt) Read more at telegraph.co.uk ...
Excuse me while I get some popcorn.
Symbolic move only, IMO.
The PRC Politboro still controls the value.
We still do nothing, and continue our bone-headed rush to de-industrialize America through so-called “free trade”.
America is so scr@wed.
Well, if rampant commodity speculation wasn’t enough to trigger an inflationary spiral (and China has been no babe in the woods in that regard), then floating their currency right now just might do the trick.
In the long run it would encourage more domestic sourcing and would therefore not be a bad thing. In the near term, it looks like malicious compliance.
There will be pain, the US consumer is strained badly at present.
Your faith in tariffs is touching.
You want to increase prices on American consumers and increase government regulatory control over our lives at the same time.
A year or so ago, the American government imposed a 30% tariff on inexpensive Chinese tires. Not a single American tire manufacturer has re-entered that market. It just isn't profitable. They have better uses for their capital.
The result is that people who can't afford expensive tires are now forced to pay more or just go without and domestic tire-makers have seen no increase in sales. Tariffs are not magic and never were.
They are implemented to protect the cronies of Congress members -- not to better our economic condition, though that's how they're usually advertised.
Red Herring.
There’s nothing about import tariffs which increase governmental control over anything.
America imposed import tariffs for many, many years.
“A year or so ago, the American government imposed a 30% tariff on inexpensive Chinese tires. Not a single American tire manufacturer has re-entered that market.”
-
There’s yer problem right there.
1) A year is not long enough to rebuild a local competitor to imports.
2) 30% is simply an irritant.
100%, across the board would get American competitors back in the game.
We won’t to worry so much about cheap Chinese imports once they really float their Yawn.
Of course we’ll also be living at near-Third World standards not being able to get many products and paying 3 or 4 times as much for the ones that are available.
And, of course, we’ll blame the Chinese for that, rather than the people that drove our industrial base over there - the UAW, IAM, NEA, EPA, OSHA, Lawyers, etc.
And where would we get tires for the three to five years it would take to get those plants built, workers trained,etc?
Idiot.
No need for name-calling.
Same place we get tires now, at least this poster - my (American) vehicle already has American made tires - came with it. Only imported tires, will become more expensive with import tariffs.
America tires will remain exactly the same price.
See how easy that is? So who’s an idiot now?
/rhetorical question
We all know that manufacturers never, ever, ever raise their prices in response to market conditions.
Idiot.
Cringing, before we go doubling prices on Americans, don't you think maybe we should clear up the fiscal and monetary policies that cause trade deficits in the first place? I have to admit that your blind trust in the power of tariffs mystifies me.
Cringing, before we go doubling prices on Americans, don't you think maybe we should clear up the fiscal and monetary policies that cause trade deficits in the first place? I have to admit that your blind trust in the power of tariffs mystifies me.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.