Having only covered competitive currency devaluations yesterday it is interesting to see this video today in which CNBC correspondent Bernard Lo raises this topic, the USA is introducing legislation that may label China a currency manipulator. Paul Krugman is partly on the fence, an artificially weak Yuan actually hurts the rest of Asia by giving an over concentration of investment in China on a cost basis because other nations cannot replicate their model of currency manipulation.
Perhaps the main point is that this is becoming a mainstream piece of news, it was only a peripheral concept last year, but without a structural rebalance the world will not recover and that means surplus nations spending some money, to be fair they see their situation as having done the right thing, and that is true, prudence pays, but when you take the accountancy approach you can’t expect exports to otheres if you yourself won’t spend any money.
