Thursday, July 21, 2005

FINALLY! CHINA RE-VALUES CURRENCY

Finally we'll see some relief from our out-of-control trade deficit. This move is long overdue, and, from my first reading of this article, probably not a very big deal. China will now be pegging to a "basket" of other foreign currencies and will restrict movement of the yuans value within a certain "band". Hopefully, this is just a first step. Now, I hope our government officials don't go falling all over themselves to "thank" China for this. This move has been a long time coming. China hasn't done us any favors with this. They simply stopped screwing us over so much....
In a move that could trim the trade gap with the United States, China revalued its currency higher against the dollar Thursday and said it would no longer have the yuan tied to a fixed rate against the U.S. currency.

The move, while small at this point, could be the first step to reduce competition for some U.S. companies from lower-priced Chinese imports.

A stronger yuan could also increase the sales U.S. exporters get from business with the world's largest country, one of the fastest growing consumer markets. U.S. exporters could keep their prices the same in U.S. dollars, thus lowering the price in yuan and spurring increased sales. Or they could keep prices in yuan level, and bring in a greater amount of dollars.