SHANGHAI, China (AP) -- China's currency rose to a fresh high against the U.S. dollar on Monday, as the central bank set its rate at 7.8402 yuan per dollar, the highest level since the current exchange system was set up in July 2005.
There is no "exchange rate system".
Trading was light as dealers tried to figure out why the People's Bank of China had shifted the official parity rate
There is no specific parity rate.
-- a weighted average of prices given by market makers, excluding the highest and lowest offers -- to well above 7.8500.
I make a market in XYZW. I have no idea what the price of XYZW is. It is somewhere between a little less than the best bid and a little more than the best ask. If someone, maybe another MM were to claim the price was something else, I couldn't disagree. When someone comes to deal for my XYZW I'll offer or buy it up to some quantity at the prices I give in my posting of the B/A, but I don't know where. Further, if the quantity dealt exceeds my normal bounds, the price will decidedly be beyond my posts. So please tell me what value there is in a "weighted average of prices given by market makers", and then tell me how long that will last. But mostly, why would anyone want to know the average price of a fixed price? I ask you, is it fixed or not?
China's central bank does not comment on its currency market activities.
How would this author know China's currency market moves especially when there are none?
China allows the dollar-yuan rate to move no more than 0.3 percent above or below the daily parity rate each day.
Proof? Who challenges the appearances of the fix? If I fix a price, if I state a price will be indefinitely defended, but no one challenges the defense, then how could it be said that there's a fix in place?
Other currency pairs -- the yuan's values against the Japanese yen, Hong Kong dollar, euro and British pound -- are allowed to move within 3 percent of the parity rate each day.
Proof? How could anyone know what the allowance is if they aren't challenged?
Why doesn't anyone challenge the so-called fix? The only possible answer is the price is the equilibrium price. China is 7.8402 times more efficient than the US. US mfging prices must fall to 1/7.8402 than what they are in order to achieve instantaneous mfging price parity. Equivalently, the prices of anything Chinese must advance 7.8402 times, and the US must prevent its prices from changing at all, simultaneously, to achieve instantaneous mfging price parity. If the US allows its prices to rise while China forces its conversion rate to fall less China's domestic inflation rate, the price of gold will rise 684% from where it is now. |
