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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 379.91+0.4%4:00 PM EST
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To: elmatador who wrote (68064)11/12/2010 6:42:42 AM
From: elmatador  Read Replies (1) of 217685
 
Sau China revalues 10%: China imports iron ore for $100. Importer buys $ for RMB612 in China CB.

BRL is 2.5/$

Vale exchanges those $100 in Brazil CB for BRL250

As the result of RMB revaluation, US agrees to stop its printing presses

US print no dollars. BRL stays BRL to 2.5/$.

Next month we repeat the operation again.

China imports iron ore for $100. Importer buys $100 for RMB612 in China CB.

BRL is still 2.5/$.

Vale exchanges those $100 in Brazil CB for BRL250.

RESULT:

China imported goods are now cheaper for Chinese industry and consumers.

China Exported goods are now 10% more expensive for foreign consumers.

Not enough for industry to be repatriated to where it come from.

But check this out: Industry in China must increase productivity.

Industry moves to a higher level and invest for productivity increment.
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