Forex Blog: Currency Trading News & Analysis.

January 22nd 2009

Obama Could Step up Pressure on Yuan

While much has been written about the forex implications of the Barack Obama Presidency, most of the commentary has focused on the Dollar, at the expense of reporting on other currencies. The Chinese Yuan, to name one such currency, could soon find its fate tied closely to Obama; it has been widely speculated that he will compensate for the reticence of his predecessor by formally labeling China a currency manipulator and pressuring its to allow the RMB to appreciate at a faster pace. Timothy Geithner, who is set to be confirmed as the next Treasury Secretary, has echoed similar sentiments. It is unclear whether such a sentiment would achieve the necessary legislative support required to levy punitive sanctions against China in order to force it into submission. Given the current global economic climate, however, it seems unlikely that China would comply. Marketwatch reports:

In fact, China itself has every reason to avoid both depreciation and appreciation of its currency. The latter could further weigh on already drooping exports, and the former could lead to capital outflows from the country, at a time it can least afford this.

Read More: Investors await Obama's signals on China's yuan

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

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