Currency questions
But is it really plausible to believe that China decided to significantly intervene on the daily reference rate just to give a boost to its exports? This explanation contradicts the Chinese leadership’s attempt to shift the world’s perception of China as a rogue player to a responsible economic power – the newly established Asian Infrastructure Investment Bank has helped improve China’s international reputation.
In addition, a competitive devaluation does not square well with China’s ambition to see the yuan as one of the world’s reserve currencies – based on the IMF’s decision on whether to include the yuan in the special drawing rights basket.
And, finally, what’s the point of triggering another confrontation with the US Congress on the matter of ‘currency manipulation’, while alienating other developing countries? Back in the days of the ‘currency wars’ rhetoric, in 2010 and then again in 2013, China was quite critical of the US Federal Reserve’s monetary policy because of its adverse impact on emerging-market economies. However, by going down the route of a competitive devaluation itself, it loses credibility and looks like another big country determined to advance its domestic priorities regardless of the impact on others.
Currency questionsBut is it really plausible to believe that China decided to significantly intervene on the daily reference rate just to give a boost to its exports? This explanation contradicts the Chinese leadership’s attempt to shift the world’s perception of China as a rogue player to a responsible economic power – the newly established Asian Infrastructure Investment Bank has helped improve China’s international reputation.In addition, a competitive devaluation does not square well with China’s ambition to see the yuan as one of the world’s reserve currencies – based on the IMF’s decision on whether to include the yuan in the special drawing rights basket.And, finally, what’s the point of triggering another confrontation with the US Congress on the matter of ‘currency manipulation’, while alienating other developing countries? Back in the days of the ‘currency wars’ rhetoric, in 2010 and then again in 2013, China was quite critical of the US Federal Reserve’s monetary policy because of its adverse impact on emerging-market economies. However, by going down the route of a competitive devaluation itself, it loses credibility and looks like another big country determined to advance its domestic priorities regardless of the impact on others.
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