Yuan and Me

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hailoh

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Post Number: 125
Registered: 04-2003

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Saturday, April 30, 2005 - 06:36 pm:

Hi Shaguar,Boomer, Rederob (I believe shaguar in mandarin translates as "stupid melon" - are you a contrarian?)

Discussion about the yuan probably warrants a thread of its own, so please excuse this intrusion.

There was an interesting article in The Economist a few weeks ago pointing out that while China runs a positive balance of trade with the USA, that surplus is virtually balanced by negative terms of trade with partners in southern and south east Asia. So when we talk about the effects of a change in the yuan, we have to look beyond simply the effect on America- the total picture is far more complex and interactive.

My own guess is that any shift in currency will be preceded by an extended period of under-subscription to US treasury offerings as countries such as China and others in the subcontinent with large dollar surpluses start running down their US dollar accounts.Such undersubscription could already have started.

Whatever happens with China, however, will also involve countries throughout Asia - it won't just be a two country thing.