«…an undervalued currency, by raising the cost of imports, acts as a kind of consumption tax for household and so reduces disposable household income. With lowe

«…an undervalued currency, by raising the cost of imports, acts as a kind of consumption tax for household and so reduces disposable household income. With lower disposable household income usually comes lower household consumption…the combination of lower consumption and higher production automatically causes a surge in the savings rate. And of course, this also acts as a subsidy to consumption for other countries whose currencies can now purchase additional imports.» The first paragraph is written by Michael Petteis. The second paragraph by the blog's author. That second paragraph is completely wrong. As Michael explains, an undervalued currency raises the cost of imports. Therefore it doesn't help "purchase additional imports".