Mr. G

The Truth Behind China's Currency Peg

The pegging of the yuan to the dollar currently makes the yuan deeply undervalued. Clearly, this is intended to make chinese exports competitive, but depegging would allow the chinese to purchase more dollars for the same yuan. How would this benefit the chinese when consumers buy our products? I dont see the advantage to China to maintain long term pegging.GI

How Bad Is the Dollar's Fall?

I think the most recent rise in the dollar (five cents against the euro) was FED action. This is the first time they lowered the rate with out increasing the money supply. Typically,lowering the rate makes the dollar weaker against the euro based on interest rate preference,but the move was counterintuitive. I can see nothing in the near future that supports the dollar and I expect it to retrace lower considering the fundamentals coming down the pike.