This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: China hints at devaluation: Main task: Explain the need for reassessment of the exchange rate policy in China. Evaluate the pros and cons of the argument (Pay particular attention to competitiveness of exports on the pros side and speculative attacks on the currency on the cons side). Argue the case for and against China allowing greater access to foreign exports into its domestic markets) Other questions that you can consider: 1. Why could a move to devalue touch off another Asian Crisis ? 2. Why is Chinas international credibility at stake? 3. China still has $140bn in foreign exchange reserves. But its trade surplus has fallen by 64% so far this year as a result of the strong currency. 1. - 3. Can be explained via possibilities of a speculative attack on the currency, which via the contagion effect, could affect neighboring countries, thereby causing anther...
View Full Document
- Spring '05