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July 24th 2006

US offers incentive for Yuan revaluation

This month marks the one-year anniversary of China’s revaluation of its currency. At the time, commentators and economists predicted China would continue to incrementally revalue its currency, and gradually move towards a market-based exchange rate. In reality, the Yuan has appreciated by less than 1.5% against the USD, and American business interests are once again calling for blood. The American political establishment has responded by introducing a new strategy, one that involves offering China a greater role on the geopolitical stage in return for dismantling the de facto peg to the USD. Specifically, the US may help China negotiate a larger share in the International Monetary Fund (IMF), so that it will have a greater ability to influence decision making. The Wall Street Journal reports:

The IMF has been trying to get China-and by extension South Korea, Taiwan, and some other Asian nations that track China’s exchange rate- to reduce their reliance on weak-currency driven exports.

Read More: U.S. Plots Deal Over Yuan Revaluation

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Posted by Adam Kritzer | in Chinese Yuan (RMB), Politics & Policy | No Comments »

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