Weekend Economists: What Goes Up....June 1-3, 2012

[Demeter]

39. China Lets Currency Weaken, Risking New Trade Tensions

IS THIS TIT FOR TAT?

http://www.nytimes.com/2012/06/01/business/global/china-lets-its-currency-slip-raising-trade-tension.html?adxnnl=1&adxnnlx=1338622287-rcpcXQ4UaUVMn94/OCjgkg

China’s currency dropped further in May against the dollar than in any other month since the Chinese government began allowing the renminbi to appreciate gradually in the summer of 2005. The shift could help Chinese exports but worsen trade friction with Europe and particularly the United States.

By setting weaker and weaker daily “fixings” for the renminbi against the dollar at the start of each day’s trading, China’s central bank has pushed down the renminbi 0.9 percent against the dollar over the last month. The decline in the daily fixings coincides with signs that the Chinese domestic economy is slowing sharply this spring and may need help from stronger exports...