The yuan has been pegged to the dollar at around 6.83 per dollar since 2008, but the visit by Treasury secretary Geithner suggests that a deal may be in the offering to see an appreciation. The Treasury will delay any report on calling China a currency manipulator so it seems likely that there will be some yuan change to ease the political pressure. This would be the deal. The forward point suggest a deal. The yen appreciation is another sign.
Of course, economics can overtake the situation. China exports have declined for 13 months. This shrunk the trade surplus by 34 percent. This was expected since the US and the rest of the world was in a global trade recession, but it is harder to argue for an appreciation when trade is declining. Now we have a China trade deficit reported for March. The change in exports YOY was half of what occurred for imports. China reported a trade deficit.
The internal politics in China makes it hard to have anything other then a token increase.
Of course, economics can overtake the situation. China exports have declined for 13 months. This shrunk the trade surplus by 34 percent. This was expected since the US and the rest of the world was in a global trade recession, but it is harder to argue for an appreciation when trade is declining. Now we have a China trade deficit reported for March. The change in exports YOY was half of what occurred for imports. China reported a trade deficit.
The internal politics in China makes it hard to have anything other then a token increase.
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