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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (357)	8/15/2003 3:38:27 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China's Currency Consequences Robyn Meredith, 07.07.03, 12:00 PM ET HONG KONG - Do Americans want Dell Computer's laptops or Nike's shoes to become more expensive? And what would happen to those companies' earnings if prices were forced up? All the talk--most notably from Treasury Secretary John Snow--of the need for China to allow its currency to rise against the U.S. dollar could have unintended consequences. It could crimp earnings of U.S. companies making products in China or buying cheap components there. In a worst-case scenario, it could trigger a reverse Asia crisis, with currency speculators betting that China's renminbi and other Asian currencies would rise, not betting they would crash. "We could face a mirror-image Asian Financial Crisis," says Ronald McKinnon, a professor of economics at Stanford University. The root of the problem is the massive U.S. current account deficit, which reached a record $480 billion at the end of last year and is expected to continue to rise. One-half of it is now financed through short-term "hot money," says UBS economist Jonathan Anderson. While the euro and British pound have risen recently against the dollar in response, Asian currencies are acting more like a dollar bloc, Anderson says. forbes.com