Dragon Master

Is Currency Intervention Possible - Or Worth It?

There is common illusion in USA, among most including USA policy makers and FED, that is deflated USD will help export and lower trade deficit. But reality goes other way around.

There are 3 manufaturing countries, also as largest export countries, German, China and Japan.

Since 1980s JPY appreciated from 260 to 80 to 110 per dollar but its trading plus with USD grew every year.

Since EURO appreciated from 0.82 to 1.5 per dollar, German export esp to USA gets increased every year.

Chinese RMB has appreciated from 8.25 to 7.1 for a year+ but trading plus with USA goes up, not decrease.

USA will have bigger trading deficit when USD down since it has lost manufacturing power on one way ticket while import price goes up in term of USD.