quote from wsj this morning:
'The People's Bank of China said in a statement it will raise the one-year yuan lending rate to 5.56% from 5.31%, and the one-year yuan deposit rate to 2.5% from 2.25%.'
naturally, the yuan will rise from this tightening policy and the us politicians may get just what they have been wishing for.
but is it? on the surface, the yuan may rise but may not go as high as the us wants, enough to help our economic woes, problems our politicians say is the fault of china. one danger if china enacts a tightening policy is that the appetite for our goods or global products in general will be curtailed. thus, halting not only the inflationary concerns in china but also putting a stop to the budding recovery outside of the middle kingdom.
so, the us politicians want the yuan to appreciate so our goods are cheaper to the chinese.
now they may just see that happening but can our economy really improve if china slows her economy down along with the G20?
paul
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