News. June 22 (Bloomberg) -- China’s yuan declined the most since December 2008 on speculation the central bank will encourage more two-way fluctuations in the exchange rate after it pledged to expand flexibility.
My point. Currencies reflect differentials in economic growth, inflation, productivity, and government policies between two countries.
China's economy is going to be one of the weakest in the world in the next foreseeable future. It is reasonable to think that the renminbi would devalue rather that appreciate.
China needs a weak currency to stimulate a sagging economy. What if I am right?
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest
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4 comments:
gold is showing the inflationary pressure as it appears from real interest rates which is negative, way down from average of 1.4.
us treasurey's are showing no inflation premium at all.
rest of commodities appears to be trending down.
housing is trending down as lumber index trending down.
money supply is going no where.
hard to understand what is going on in the market?
Gold is sending an important message -- too much uncertainty. Especially now when most asset classes are going nowhere.
Time to listen carefully to its message.
George
A chinese friend of mine has pointed out to me for the past few years the the idea of a stronger yuan makes no sense. He says the black market in China pays a hefty premium for dollars. That is NOT a currency ready for appreciation!
Amen! Thanks for the input.
George
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