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The Chinese monetary authority has tied the yuan to the dollar. The U.S. would like the dollar to float down against the yuan so as to improve the U.S. balance of payments deficit with China. China adamantly refuses to let the yuan float.
How all this will play out I do not know.
Perhaps China is saving up to buy the U.S. :-)
Don, I don't know, but with a Trillion cash they've already got the down payment for a F.H.A. loan!
FYI, I have a taker on my bet that front month WTI will not reach $100 in 2007. The money will held in Super G's Paypal account until 1/1/2008. If anyone else wishes to participate, let me know.
Cheers, RR
P.S. Did not mean to post this under Bob's post. There is an edit button, but not a delete button. :-)
It would certainly be better to have the Chinese buy up the US than the Arabs, as their society would assimilate much easier and are much more accommodating. They also have retained more of their old world technology, and it may be needed in the future. A White, Black, Hispanic, Oriental, Hybrid human specimen may be quite adaptable to the environment in 8 to 10 generations. Where else but North America.
??????!!!!! The yuan is and has been floating. It may be floating much more slowly than some would like but the movement is clear. It's fact, not my opinion.
The yuan has been allowed to float in a VERY narrow band. For all intents and purposes, the yuan is pegged to the U.S. dollar, because the Chinese like it like that.
A very narrow band that keeps moving up is a float. If you say movement of only a little over 2% since they abandonned the peg is the same thing as a peg we're not speaking the same language. Every indication is that the yuan will continue to slowly increase in value for quite a while before the Chinese change tack. And they are no longer looking only to the dollar.
According to your numbers, what is the percentage appreciation of the yuan against the dollar in 2006?????
Go to xe.com. I watch daily, same as watching nymex or checking the weather.
Very wise of the Chinese; they set their currency in motion only enough to be able to point out it isn't, technically, fixed. Is it floating? Not compared to the rest of the world's floating currencies. Is it pegged? Technically no, since it is moving. Heavily managed to move just enough to shut up protectionists in the US? Working so far...
You got that exactly right.
We can argue all day over the semantics of the yuan's 'flexible trading band', but in the eyes of FX traders, economists, hedge fund managers, the US Treasury, the Fed, and the world's central bankers, China's currency is to all intents and purposes pegged to the dollar.
For all intents and purposes, as we enter the new year, it's just as valid to state that the yuan is propping up the dollar as vice versa. If China would extend/loosen that band they have now for the yuan, effectively pushing it upward, the dollar could go in freefall mode.
Paulson and Bernake are well aware of that, and their trip recently certainly included talks on the topic. The US likes it "like this" too, but won't say it. Domestically, it's much more rewarding to supply headlines about unfair trade practices.
It's a peg if the price is where you want it and a wunnerful free market if the price is where I want it. Is there a currency entirely at the whim of forex traders? Possibly something minor and weak.