Yuan Seen Nothing Yet

(Consider this my official entry in the "worst post title" contest this year.)

China has moved to revalue its currency, alternatively referred to as Renmenbi or Yuan (although when I was over there, everyone called it Kwai). In the rest of the news, this is being downplayed, but it could be major news in the trade world, as Chinese imports will rise in price and US exports to China will become cheaper.

That said, it will take time for the implications of the changed valuations to have much of an impact on import and export markets.

Another concern is more immediate. Already, the Malaysians have also followed suit. No longer pegging means that these governments will be picking up fewer dollar-denominated assets. This may very well have some impact on things like interest rates at home.

I imagine Krugman will have some much more informed thoughts than mine soon.

--Matt Singer

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