Yuan Drops 5 Consecutive Days, 1.8% Lower Than the Announced "End of the Peg"
By Mike Shedlock on 08/16/2010 – 9:54 am PDT
It should not be too long before Congress starts threatening China with “currency manipulation charges” given the Renminbi (Yuan), has now fallen five consecutive days and sits below the level it was at when China announced the end of the peg in June.
The Telegraph reports US and China to clash over yuan fall
The yuan dropped at the fastest pace in almost two years last week and is now 1.8pc lower against a basket of currencies than in June, when Beijing announced the end to its fixed peg against the dollar.
Western economists had seen yuan liberalisation as a sign that China is abandoning its mercantilist policy in a step-by-step move towards a floating currency, which was expected to rise. They misjudged China’s motives badly.
Sander Levin, chair of the House Ways and Means Committee, said the US may have to consider retaliatory sanctions. “We must ensure that the international trading system ensures fair rules of competition. There is no real question that China’s deliberately undervalued exchange rate is unfair, contributes to global trade imbalances, and costs the US jobs,” he said.
Many on Capitol Hill suspect that China fiddled trade data with a “one-off” deficit in March when the Obama administration was preparing its verdict on whether Beijing is a currency manipulator.
Jim O’Neill, chief global economist at Goldman Sachs, said China’s exchange policy was becoming a concern. He described its as “most odd” for Beijing to weaken the yuan at a time when US data has been weak and China’s trade surplus has reached the highest in 18 months.
“It is not a great week for those of us who believe the big era of US-Chinese global imbalances is behind us.”
Tension between the US and China is escalating on several fronts. China has restricted exports of rare earth minerals by more than 70pc in the second half of this year, cutting off the world supply. China produces 97pc of these minerals, used in a wide range of high-tech industries, from hybrid engines to computers, mobile phones, radar, navigation and precision-guided weapons.
Big Imbalance Correction Ahead
The mystery to me is how anyone could possibly have thought the “big era of US-Chinese global imbalances is behind us.”
Get Out The Violins
In June dollar bears were convinced Armageddon was at hand for the US dollar. Instead on June 19, 2010 I thought China Plays Obama like Violin on Yuan Exchange Rate
On June 21, 2010 I asked Yuan Climbs Most in 20 Months – a “Whopping” .37 Percent; Are we Supposed to be Impressed?
By Mike Shedlock on 08/16/2010 – 9:54 am PDT
It should not be too long before Congress starts threatening China with “currency manipulation charges” given the Renminbi (Yuan), has now fallen five consecutive days and sits below the level it was at when China announced the end of the peg in June.
The Telegraph reports US and China to clash over yuan fall
The yuan dropped at the fastest pace in almost two years last week and is now 1.8pc lower against a basket of currencies than in June, when Beijing announced the end to its fixed peg against the dollar.
Western economists had seen yuan liberalisation as a sign that China is abandoning its mercantilist policy in a step-by-step move towards a floating currency, which was expected to rise. They misjudged China’s motives badly.
Sander Levin, chair of the House Ways and Means Committee, said the US may have to consider retaliatory sanctions. “We must ensure that the international trading system ensures fair rules of competition. There is no real question that China’s deliberately undervalued exchange rate is unfair, contributes to global trade imbalances, and costs the US jobs,” he said.
Many on Capitol Hill suspect that China fiddled trade data with a “one-off” deficit in March when the Obama administration was preparing its verdict on whether Beijing is a currency manipulator.
Jim O’Neill, chief global economist at Goldman Sachs, said China’s exchange policy was becoming a concern. He described its as “most odd” for Beijing to weaken the yuan at a time when US data has been weak and China’s trade surplus has reached the highest in 18 months.
“It is not a great week for those of us who believe the big era of US-Chinese global imbalances is behind us.”
Tension between the US and China is escalating on several fronts. China has restricted exports of rare earth minerals by more than 70pc in the second half of this year, cutting off the world supply. China produces 97pc of these minerals, used in a wide range of high-tech industries, from hybrid engines to computers, mobile phones, radar, navigation and precision-guided weapons.
Big Imbalance Correction Ahead
The mystery to me is how anyone could possibly have thought the “big era of US-Chinese global imbalances is behind us.”
Get Out The Violins
In June dollar bears were convinced Armageddon was at hand for the US dollar. Instead on June 19, 2010 I thought China Plays Obama like Violin on Yuan Exchange Rate
On June 21, 2010 I asked Yuan Climbs Most in 20 Months – a “Whopping” .37 Percent; Are we Supposed to be Impressed?