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To: tm22721
A 27% tariff might cause them to re-consider.

$55 oil might cause them to re-consider, too. Once China decided to peg its currency to the dollar, they lost any control they might have had over their own currency. When the U.S. dollar declines against the Euro, the Chinese yuan declines against the Euro even if there is nothing in the Chinese economy that would otherwise cause such a decline.

77 posted on 04/18/2005 9:01:17 AM PDT by Alberta's Child (I ain't got a dime, but what I got is mine. I ain't rich, but lord I'm free.)
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To: Alberta's Child

>>"When the U.S. dollar declines against the Euro, the Chinese yuan declines against the Euro even if there is nothing in the Chinese economy that would otherwise cause such a decline."<<

China has complete control over the Yuan, it's their decision to peg or unpeg. The devaluation of the Yuan versus the Euro, because it's pegged to the dropping dollar, is again a boon to China - making its products even more competitive in the European market. And in a double whammy to European companies, because of the dollar drop - thus yuan drop - versus the Euro, China will now buy more from the US than from the Europeans, since the Dollar-Yuan rate remains unchanged. Europeans here in Shanghai are hoppin' mad about it.

Under these circumstances, why would China want to unpeg the yuan from the dollar?


84 posted on 04/18/2005 9:33:09 AM PDT by guitfiddlist (When the 'Rats break out switchblades, it's no time to invoke Robert's Rules.)
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