Saturday, July 14, 2007

Renaming greenback

I had recently posted on Chinese surplus ($22.5 billion) and its swelling forex reserves ($1.2 trillion).

Now follows the story of India’s forex groundswell ($214.83 billion) over the weekend. Still we have no trade surplus (as china has) - since our currency exchange rate is integrated well into the global financial system because of which we have an appreciating rupee. Chinese RMB (Yuan) is artificially kept undervalued by about 30% and that accounts for its mighty trade surplus.

Earlier the RBI used to release annual reports on currency reserves. The one linked here is an extract from RBI’s supplement for the week ended 6th July. Talk of changing times….

Chinese had better yield to fervent appeals by U.S Treasury to loosen up RMB. Ben Bernanke gets a stress attack each time he crunches the U.S. trade deficit numbers. Hounded by the treasury, he might as well rename $ as RMB if China doesn't relent....

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