3 ms·
yuan is highly stable over the past 2 decades, in fact it gained about 20% on the dollar over that time frame. The problem with Yuan are more with its low conv
by Aperocky 5y ago
yuan is highly stable over the past 2 decades, in fact it gained about 20% on the dollar over that time frame.
The problem with Yuan are more with its low convertibility (read: usage rate outside China), but that may change eventually. Using currency sanctions to achieve political goals are simultaneously expending trust in those currencies.
- vineyardmike 5y ago> highly stable over the past 2 decades, in fact it gained about 20% Stable or gaining 20%? Also its not stable, nor trustworthy. You can't trust china to not manipulate it.
- CyanBird 5y ago> You can't trust china to not manipulate it. Rather you 'can* trust China to manipulate it when needed, they need the currency to serve specific macroeconomic policy decisions and they will use the levers on their power to achieve it, the fact that western speculators might get burned for it is not a core government interest at this time, maybe in the future
- Aperocky 5y ago> Also its not stable, nor trustworthy. The Euro had much larger fluctuation in the same time frame. Lecture me, are your definition of stable tied to data, or is it tied specifically to your own opinion? How long would it be until you admit it was actually stable? 10 more years? 100? A millennia?
- thematrixturtle 5y agoNot to put too fine a point on it, but the reason the US Federal Reserve exists is to "manipulate" the dollar. Personally, I've always liked Singapore's approach of anchoring the Singapore dollar to a basket of major currencies. However, they also give themselves leeway by not publishing the basket's constituents or weightings, meaning they can still make the dollar dance by tweaking those.
- lottin 5y agoCurrency pegs are vulnerable to speculative attacks. https://en.wikipedia.org/wiki/Speculative_attack https://en.wikipedia.org/wiki/Speculative_attack
- Aperocky 5y agoChina has more than 3 trillion USD in reserves, which makes any speculative attack essentially financial suicide.
- imtringued 5y agoUsing a negative interest rate to reduce the miney supply is a much better idea than using a peg. To be fair you can do both. A negative interest rate is a speculators nightmare.
- rswail 5y agoI thought that because Singapore is primarily a market/port economy, having its currency pegged against a basket that covers the majority of its trade weightings would help it withstand dramatic movements in individual currency swap rates with the Singapore dollar.