Chinese currency at a 19 year high versus the US Dollar

Chinese currency at a 19 year high against the US Dollar

For a long time, especially the U.S. and EU criticised the outside value of the Chinese currency and demanded from the Chinese government adequate measures to increase it because its low value was leading to unfair competition. These days this lamenting came to a sudden stop

The reason that the lamenting came to a sudden halt is the fact that since 1994 the Chinese currency added 42 % in relation to the USD and since July 15, 2005 it increased by 34.5 %. For the time being it is the Chinese government’s will to raise the value of its currency and not because of outside pressures. It seems that the government is willing to accept that in the future the market defines the value of the country’s currency. This will go hand in hand with the limitations of capital control and, at the end of the day also the level of interests will be set by the market. Artificially low interests rates have been causing the bubbles in the realty sector and at the stock exchange, as well as overcapacities in the industrial sector.

The global world is changing and we are aware of the difficulties and challenges ahead. These facts will influence also the Chinese growth rates of GDP Gross Domestic Product, its exports and employment. Therefore, the Chinese government is directing its efforts to eliminate imbalances and to strengthen the power of local consumers, all to become less dependent on exports and to try to render the Chinese population more content.


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