Sept 20,2010
Yuan comes into focus among U.S. policymakers, investors
Between the summer of 2008 and June of this year, China's yuan was pegged to the dollar - but even though the Chinese government is letting the currency float, many in the U.S. are saying its gains are insufficient.
Treasury Secretary Tim Geithner joined that chorus on Thursday, saying at a Congressional hearing that "China needs to allow significant, sustained appreciation over time to correct [the yuan's] undervaluation and allow the exchange rate to fully reflect market forces."
He did not indicate, however, that the Treasury would take aggressive action to punish China - a stance some called inadequate.
"It is time to move beyond just talking," Senate Banking Committee chairman Chris Dodd, a Connecticut Democrat, said.
Famed investor George Soros, chimed in at a Reuters event on Wednesday, suggesting that China's currency is worth far more than its current value. "The Chinese currency is the strongest in the world, except you can't own it," he indicated.
China's refusal to let the yuan rise is more than just a political matter. By keeping the yuan devalued, China helps its exporters and renders imports more expensive. It's because the yuan is so depressed that the U.S. trade deficit with China is widening; as long as the currency remains low, China will continue to be a net exporter.
Yuan comes into focus among U.S. policymakers, investors
Between the summer of 2008 and June of this year, China's yuan was pegged to the dollar - but even though the Chinese government is letting the currency float, many in the U.S. are saying its gains are insufficient.
Treasury Secretary Tim Geithner joined that chorus on Thursday, saying at a Congressional hearing that "China needs to allow significant, sustained appreciation over time to correct [the yuan's] undervaluation and allow the exchange rate to fully reflect market forces."
He did not indicate, however, that the Treasury would take aggressive action to punish China - a stance some called inadequate.
"It is time to move beyond just talking," Senate Banking Committee chairman Chris Dodd, a Connecticut Democrat, said.
Famed investor George Soros, chimed in at a Reuters event on Wednesday, suggesting that China's currency is worth far more than its current value. "The Chinese currency is the strongest in the world, except you can't own it," he indicated.
China's refusal to let the yuan rise is more than just a political matter. By keeping the yuan devalued, China helps its exporters and renders imports more expensive. It's because the yuan is so depressed that the U.S. trade deficit with China is widening; as long as the currency remains low, China will continue to be a net exporter.