Tuesday, June 22, 2010

A Chinese Currency Adjustment

Yes, I'm back now. Not much seems to have happened while I was gone, except for an adjustment of the official Chinese currency policy.

It looks like it is essentially a re-run of the 2005 "de-pegging", which means a very slow and gradual appreciation, or in other words a Singapore-style managed float system with a controlled and slow appreciation.

This will not really change much economically, at least not if the adjustment was as slow as during the first two years of the 2005-08 adjustment. Hopefully it will however be enough to stave off a U.S.-Chinese trade war.