Thursday, July 21, 2005
China Revalues Its Currency
China raised the value of its money by 2.2%. In other words, someone woke up and asked, "How can we screw the U.S. today?"
(BBC) "China is protected by having huge currency reserves of $750bn (£400bn), built up by its years of trade surpluses. But many of these are in US Treasury bonds, which will become less valuable to China after its revaluation.
So China may start to switch from holding dollars to holding other types of currency, for example the euro, which could lead to a sharp fall in the value of the dollar.
It could also make it more difficult (or expensive) for the US government to finance its massive budget deficit."
Yes, we're the ones getting ourselves into this mess, but China's latest move doesn't really help much.
posted by El Capitan at 7:07 AM