Japanese Lessons for China’s Currency
While the question of how much China’s currency should appreciate to rebalance its trade has become a global hot-button issue, the answers have been all over the map. But the one thing about which everyone seems to agree is the theoretically and empirically unjustified assumption that an equilibrium exchange rate actually exists.
SHANGHAI – The question of how much China’s currency should appreciate to rebalance its trade has become a global hot-button issue. But the answers have been all over the map, with some finding that the yuan is not undervalued at all, while others argue that it should appreciate against the dollar by more than 30%.