Posted on Friday, 18th June 2010 by Laura Hernandez
China, set to move its dollar peg for the yuan, could end up with a weaker currency not a stronger one, according to Nouriel Roubini.
It all comes down to the euro, which has depreciated against the dollar significantly over the last few months. China may have to follow that course of depreciation as well, making the yuan less valuable vis-a-vis the dollar, according Roubini.
While treasury yields might boom as a result of China’s managed float Monday, this could have a more long term impact on the China-U.S. trade balance if it ends with an even stronger dollar.
Check out Albert Keidel’s presentation on why China doesn’t have to revalue >
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