Friday, July 15, 2005

Revaluation imminent?

Has push come to shove?

From today's Financial Times:

US expects Chinese currency revaluation
By Demetri Sevastopulo and Andrew Balls in Washington, and Richard McGregor in Beijing
Published: July 15 2005 02:08 | Last updated: July 15 2005 04:16

The Bush administration has told key senators that it expects China to revalue its currency in August ahead of a planned visit to Washington by President Hu Jintao in September, according to people familiar with the matter.

Senators Charles Schumer and Lindsey Graham, co-sponsors of a bill that would impose a 27.5 per cent tariff on Chinese imports, agreed to delay a vote on their bill after receiving what they regarded as an assurance that China will move on its currency next month.

In a June meeting attended by Alan Greenspan, Federal Reserve chairman, John Snow, Treasury secretary, told the senators that he believed China would allow the value of the renminbi to increase against the dollar in August, the people familiar with the discussion said.

“Senator Graham and I believe that the administration is convinced that China will begin a revaluation process this summer, forced by our bill's success in the Senate,” Mr Schumer told the FT.


Anonymous said...

Me so confused. One article saying RMB revaluation unlikely, the next saying it's inevitable.

I it doesn't specify how much it will revalue, perhaps that's the catch. They will announce a 0.001% devaluation to mollify the senators and avoid the tarrif.

Steve Hsu said...

If you guess right, you might make some money :-)

It seems very odd that the Bush WH is claiming an iminent reval. Perhaps they are just gaming Schumer and the Senate?

Later reports have Cheney and Snow backing away, saying that, after all, it is a sovereign decision for the PRC...

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