Painful Devaluation (IIPM-Article)

Indeed, over the longer term, the biggest concern for China is that some day money will be trying to get out. Even China’s vast reserves will not be enough to stave off a painful devaluation. It is a lot easier to exit from a fixed exchange rate regime when the pressures on the currency are upwards. While it may seem hard to imagine that the speculative tide might ever turn against China, exchange-rate pressures can turn in an instant. Today’s darling currency can be tomorrow’s dog...

Source: IIPM Editorial

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Copyright: IIPM 2006