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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 408.23+2.3%Dec 22 4:00 PM EST

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To: TobagoJack who wrote (62225)3/26/2010 7:47:06 AM
From: Golconda  Read Replies (1) of 218673
 
zerohedge.com

By Economic Forecasts & Opinions

The United States, the European Union and others have long been critical of China's renminbi / yuan regime. Many U.S. lawmakers complain China's currency is undervalued by as much as 40% and undercutting the competitiveness of U.S. products.

Internationally, China is under growing pressure--especially from the United States--to appreciate the value of the yuan. Chinese leaders contend that the yuan's role in trade balance is limited, and asked nations to loosen the restriction on the import of products instead.

Two Diverging Swan Diagrams

This yuan-induced heated debates prompted two prominent economists to reference the age-old Swan diagram. However, each came up with a different position for China. The Swan diagram is generally used to represent the situation of a country with a currency peg. The concept was developed by Trevor Swan in 1955.

The two diverging swan images are also reflective of the clashing views regarding currency between China and the U.S. In this case, beauty is really in the eye of the beholder. While both economists agree that China’s currency is undervalued, they diverge on the approach of the issue.
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