Chinese Yuan Continues Climb Against Dollar

Exporters in the US are happy. The Chinese yuan has climbed to a new high up 3% since Beijing cut direct links to the U.S. currency about 16 months ago.

Still US and other traders are pushing for a faster rise saying the weak yuan is contributing to China’s trade surplus.

Wrong.

The same story was told some twenty years ago when the Japanese yen rate was said to be too low. Pushing and crying about exchange rates ensued.

The yen is now twice as strong as it was before the whiners got their wish. The result is there is still a huge trade surplus…we just ended up paying more for Japanese goods and they still didn’t buy ours.

Why do traders think it will be any different with China?

The answer is for America to make better products that the Chinese want and can afford. Then the trade surplus will even out.

What do you think?