RMB falls. What does this suggest?

RMB falls. What does this suggest?
Jul 22, 2008 05:03
YVONNE Points: Join Date: Nov 29, 2004 Status: offline	So far in 2008, China's RMB has appreciated 6 percent. However, in recent days, it began to fall. Yesterday, RMB fell for its third consecutive day. By midday in New York, Chinese yuan dopped 0.2 percent. It is perceived that RMB's continued appreciation might stop according to the current situation. Meanwhile, some people and organizations guess that it might be a beginning of policy shift. The authorities want to remind the investors that they can't always make money from RMB appreciation. They also want to prevent speculative capital entering Chinese market. In the previous months, China has just used RMB as a tool to ease the inflation pressure in the over-heating economy. These are the analysts' guess. What are your opinions? Just "normal daily fluctuations"?

Jul 22, 2008 05:03

YVONNE
Points:
Join Date: Nov 29, 2004
Status: offline

So far in 2008, China's RMB has appreciated 6 percent. However, in recent days, it began to fall. Yesterday, RMB fell for its third consecutive day. By midday in New York, Chinese yuan dopped 0.2 percent.

It is perceived that RMB's continued appreciation might stop according to the current situation. Meanwhile, some people and organizations guess that it might be a beginning of policy shift. The authorities want to remind the investors that they can't always make money from RMB appreciation. They also want to prevent speculative capital entering Chinese market. In the previous months, China has just used RMB as a tool to ease the inflation pressure in the over-heating economy. These are the analysts' guess.

What are your opinions? Just "normal daily fluctuations"?

Jul 22, 2008 07:48

GARYKINKADE
Points:
Join Date: Jan 8, 2008
Status: Offline

IMO.....yes it's a tool , just like the price of oil is a tool, a long as certain institutions have the controlling power to be able to manipulate that commodity.
For the average investor it's like "chasing rabbits" i.e. a lot of energy or (monies) is wasted in the chase which may end with empty results.
The $US on the other hand has been cornered with no room to maneuver, inflation or hyper-inflation may be the only answer. Hello Germany, "circa" early 1920's, and I hope with no Hitler attached (but we're real, real close)

Jul 22, 2008 17:16

COOLSPRINGS
Points:
Join Date: May 19, 2008
Status: Offline

Hot money enters into china for seeking high rate of return in speculative stock market, real estate market instead of commitment to productivity of capital assets. In gradually heated economic party that accompanied by inflation, everybody is happy until it’s burnt out, and the party is over.

I am wondering how #1 reserves denominated in USD are allocated. Are they going to infrastructure investment abroad (I guess it’s going on now), expanding public expenditures or are they abused in speculation as mentioned above (a big threat that results in inflation and economic bubble).

Here is the quote from former Singaporean leader Lee Kuan Yew:

<<In the early stages, when you try to bring up a very low level of economy to catch up with others, the government must be an activist, and catalyst to growth. But once the business got going, they would become too complex and specialized for any government to be involved. Hence private entrepreneurs and companies must be encourage to take over.>>

Post a Reply to: RMB falls. What does this suggest?