ARTICLE: "Revaluation by stealth: China is allowing its currency to rise more rapidly. Why?" The Economist, 12 January 2008, p. 69.
Since October the yuan rises at annual rate of 13%, the fastest rate yet since the official peg loosened in 2005. Total rise since then is 14%. More rise is expected.
Why?
… the main reason why China is allowing the yuan to rise faster is because its policymakers believe the benefits to China from a rising currency now outweigh the costs.
Ah, that would be inflation.
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Comments (3)
Fascinating! Thanks for the link!
Posted by dan tdaxp
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February 22, 2008 7:37 AM
Pardon the stock tip, but the best way to take advantage of the Yuan/Dollar situation may be to buy stock in the Aluminum Company of China (symbol ACH)
The stock is not for faint hearted as it has been as low as 21.50 and as high as 90.95 in the last year.
The stock at $48 sells at a fraction of its book value. The company makes decent money in Yuan, BTW.
The management is right on target as it got together with Alcoa and quietly bought a good chuck of Rio Tinto. Rio Tinto in turn is being pursued by worldwide mining giant BHP
Posted by J Canepa | February 22, 2008 10:42 AM
It will be increasingly difficult for the FED to control inflation in the states. Raising the interest rates here won't apply the short term fix that it has in the past A major component for our inflation will be passed on to us by our trading partners as their standard of living improves.
Posted by rblx | February 22, 2008 3:48 PM