Beggar Thy Currency Or Thy Self?

Devaluation of the currency.

China s Daring Depreciation

20. The national currency was devalued.

A Devaluation Option for Southern Europe

This presents a decrease of some 30 per cent in the value of the United States dollar against the euro.

Another obstacle was the problem of sunken cost.

That's just what this Soule's figuring on running it right down to nothing.

You write the check, and instantly it depreciates 30 percent.

The value of the dollar declines as the rate of inflation rises.

I'm going to criticize your work with a baseball bat.

Of course, the renminbi s recent depreciation was much smaller than the de facto currency devaluations engineered by the United States and the United Kingdom after the financial crisis of 2008. It was also nowhere near as significant as the devaluation that the Bank of Japan has pursued since 2012.

Since then, many calls for coordination have lamented the outbreak of currency wars, otherwise known as competitive depreciation an old phenomenon that recalls the tit for tat devaluations of the 1930s. Now, as then, the fear is that if all countries try to depreciate their currency to gain export competitiveness and boost their economies, all will fail.

These are reasonable objections, but they should not be allowed to lead to unreasonable conclusions. The alternatives on offer are internal and external devaluation.

Given these factors, it seems likely that the recent devaluation was driven by a different goal. And, in fact, an announcement made on the same day as the devaluation one that has been largely overshadowed by the panic offers an important indication of what that goal was.

The won has been devalued sharply, making exports more viable.

You enjoy making a person look like two cents, don't you?

He made Jiggs feel like two cents, me even less.

But the euro s depreciation is too recent to have made much difference yet. Historical evidence, not to mention Japan s experience with a falling yen, suggests that it takes several quarters, or even years, before the positive impact of currency depreciation on net exports is felt.

Take the same country s current account deficit and ask how large a real depreciation is needed (making some assumptions about trade elasticities along the way) to close that external gap. If the recent real depreciation achieves that threshold, no further change in the exchange rate should be expected.

a A higher real exchange rate signifies a real depreciation of the local currency.

But, since none of these countries has a national currency to devalue, they must substitute internal devaluation for external devaluation. They have to cut wages, pensions, and other costs in order to achieve the same gain in competitiveness needed to substitute external demand for internal demand.

Some have accused Japan of fueling a global currency war. Anticipation of aggressive monetary expansion has sharply weakened the yen, which has fallen by almost 20 against the dollar in just over four months.

depreciation of nonconvertible currencies.

Finally, the renminbi s recent decline against the dollar was only 2.5 , from CN 6.2 to CN 6.35 far below the double digit declines of the Japanese yen, the euro, and the British pound. So, on an overall trade weighted basis, the renminbi is substantially higher relative to the currencies with which it competes.

The standard way to buffer the effects of austerity is to marry domestic cuts to devaluation of the currency. Devaluation renders exports more competitive, thus substituting external demand for the domestic demand that is being compressed.

The dollar shortage created depreciation pressures on the CNY, which the PBoC declined to offset. The CNY was thus bound to fall, which it did last September.

The RMB middle price is registered at 6.4401, a depreciation of 66 basis points. The rising slows down.

Looks like it won't be worth much nohow when Soule and his crowd gets through with it.

In fact, as China pursues structural reforms aimed at ensuring its continued development, forced depreciation is about the last thing it needs. It would also be highly problematic for the global economy.

But there is a more fundamental point From an economic viewpoint, currency manipulation or unfair undervaluation are exceedingly hard to pin down conceptually. The renminbi's slight depreciation against the dollar in 2014 is not evidence of it many other currencies, most notably the yen and the euro, depreciated by far more last year.

If the euro falls by 20 25 , bringing it close to parity with the dollar and weakening it to a similar extent against other currencies, the current account deficits in Italy, Spain, and France would shrink and their economies would strengthen. German exports would also benefit from a weaker euro, boosting overall economic demand in Germany.

By my calculations, the dollar still needs to go down another 15 if the US trade deficit is to go back towards balance. Ideally, Asian currencies would rise much more than 15 while European currencies would rise less.

When this pattern is combined with the depreciation of the new Israeli shekel (NIS) in 2003 and then its appreciation in 2004, it is clear that while the Palestinian trade balance does not benefit from the depreciation of the Israeli currency, it suffers the full negative impact of currency appreciation.

The Committee s recommendation to use GNP rather than national income for the current scale of assessments, therefore, means that it continues to base itself on an income rather than a product concept, but prior to provision for depreciation, for which the quality of estimates is variable.

One need not be an economist to figure out that, while all currencies can (and do) depreciate against something else (like gold, land, and other real assets), by definition they cannot all weaken against each other. In order for some currencies to depreciate, others must appreciate.

This reflected a decrease in real terms, due to inflation and the devaluation of the dollar.

This is the craft that was going on, but there are a few collectors who also collect art which can depreciate.

The situation of some countries had worsened recently as a result of the devaluation of their currency.

This, in turn, resulted in substantial currency devaluations and required a sudden contraction of trade deficits.

This sharp devaluation increased further the cost of debt servicing and the debt to GDP ratio.

But some depreciation of the euro would provide a bridge to reach internal governance reform. And, like it or not, rising pressure on the euro is likely to force European officials to cross it.

Since the implementation of the new exchange reform, the previous appreciation state of RMB was changed. The central parity rate of RMB exchange rate in one year was about 8 .

15. The national currency has stabilized, depreciating by 1.5 per cent against the United States dollar in 1997, which resulted in a real appreciation of 3 per cent. Credit growth has been strong.

This will be much helped by the large devaluations of their currencies during recent months.3