Is China Prepping for a Currency War?

[SDBoiler1]

Will the US follow suit? Truth is, the US has been devaluing its currency for years, including under GWB. Should the US follow suit because of China's move and recent EU moves?

In the last year, the dollar has strengthened fairly substantially, causing commodity prices to go down. Part of the drop in the price of oil is due to the dollar strengthening.

What does the board think? Implications for US economy?

Yuan Being Devalued

 

[gr8indoorsman]

China's been artificially manipulating their currency for nearly a decade. It's not new.

 

[SDBoiler1]

This is true. Previously, they have not been as "transparent" about it.

 

[gr8indoorsman]

They've been transparent in that you can look at their astronomical GDP numbers and trace those to their driving the Yuan artificially low to prop up their exports, increase revenue for their economy in "inflated" Yuan, and then take credit for double-digit GDP growth. Meanwhile, the standard of living for the majority of their population remains unchanged.

 

[LSLBoiler]

The currency "war" has been going on for many years. We live in Switzerland and my wife gets paid in CHF. The recent SNB move of uncoupling the CHF from the EUR has brought the USDCHF exchange rate back where it stood about a year ago. We live near Basel so we go into Germany and France a lot. Everything's cheaper there and with the EURCHF a about 1.05 now vs 1.20 a few weeks ago there's even more incentive to cross the border to grocery shop, buy fuel, eat in restaurants, etc. For the first few days after the SNB move there were long lines at currency exchanges because the Swiss were dumping francs and buying euros. It's calmed down a lot now.
Prices here in Switzerland are insanely expensive but the lifestyle and overall quality of life are outstanding.
There is no minimum wage in Switzerland and the unemployment rate is 3.4% however, Swiss workers are very well paid compared to theose in neighboring countries. For example, a grocery store cashier in Germany makes about €1600/mo while the Swiss one makes CHF4,000.
This post was edited on 2/7 3:15 AM by LSLBoiler