India and Brazil Join Call For Chinese Currency Adjustment

Dave Johnson

Finance officials from the G20 countries are meeting for three days beginning tomorrow. China’s currency manipulation is one of the top items on the agenda because it is hurting the entire world, not just the United States. The currency is undervalued by as much as 40%, and small, incremental adjustments

India and Brazil are the latest countries to speak out about this problem. China’s currency imbalance – along with other unfair trade practices – has created a huge bubble causing tremendous strains around the world and it is going to pop one way or the other. The question is, does it deflate in a managed way, or does it just blow up one of these days, taking the world’s economy down with it.

President Obama is in the position that Alan Greenspan was in when the housing bubble was getting worse. Does he take steps to force China to being to address this problem and bring their currency into balance, or does he go with the flow and let it just get worse. Greenspan stuck his head in the Ayn Randian sand and just let the housing bubble get worse, and we are all living with the catastrophic result.

India, Brazil Back U.S. Position on Yuan Before G-20,

Central bank governors in India and Brazil backed a stronger Chinese yuan, siding with U.S. President Barack Obama before a meeting of the Group of 20 nations this week.

Brazil’s Henrique Meirelles told a senate hearing yesterday in Brasilia it was “absolutely critical” that China should let its currency appreciate.

“If China revalues the yuan, it will have a positive impact on our external sector,” [India’s] Subbarao said. “If some countries manage their exchange rate and keep them artificially low, the burden of adjustment falls on some countries that do not manage their exchange rate so actively.”

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