SC, All currencies float, but when they are "allowed to float," that means the govt. will no longer rush in to support the value at a certain level. There is a couple of problems with allowing your currency to collapse to increase exports. Reagan/Baker did it just prior to the 1987 crash. -g- First, since import prices go up, and Hong Kong imports EVERYTHING, you have rising inflation and interest rates. Second, no one country knows that secret, so if HK exports do well at the expense of Taiwanese exports, there is no reason Taiwan can't "float" to meet the challenge. Then you get a rousing chorus of "Duelling Currencies" played on banjo by the actor who died in the movie and the funny-looking kid. -g-
Most Asian countries peg to the dollar. Thailand did, Philippines did, Korea doesn't, officially, Taiwan does. Argentina and Brazil have various degrees of pegging. The Chilean Peso is better than the buck, so they don't. MB |
