Friday, November 12, 2010
China selloff leaves stocks reeling
After the G-20 meeting, the trade war between the U.S. and China continues to heat up as China refuses to revalue its currency. To make it worse though, according to this article, China is starting to sell off the U.S. currency futures. This has resulted in the Shanghai composite to slump down by 5%. The effect is anticipated to be similar in the US market as the war between the US and China leads to an increasing economic uncertainty. Do you think that the US vs. China trade war will also trigger the currency war?
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3 comments:
If China does revaluate its currency, it will certainly give US exports a boost which is the central agenda of Barack Obama at present. However, by selling US currecny futures, China is causing the US dollar to further weaken. Hence, I do believe that if pushed more, China will surely indulge in currency war with the US.
I agree with Yashika, I think the selling off of US currency futures is a sign that they are able to influence the value of our dollar, and that a currency war with them may not be a good idea.
It's ironic that we want China to increase the value of its currency while we don't want our currency to weaken. Yes China's recent move has proved that it's a tough country to deal with. Yet, this move also causes China to deal with inflation, a demand by many factory workers for higher wages and a potential currency or trade war with the US. These are no easy tasks.
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