| Science Forum Index » Economy Forum » What are the disadvantages of depreciating in real terms |
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| Brablo |
 Posted: Tue Dec 06, 2005 8:32 am |
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What are the disadvantages of depreciating in real terms a domestic
currency? I read that the valuation of a stock index whose costs are
laregly incurred domestically but earn significant revenues in foreign
markets or who face international competition in their home market tend
to be negatively correlated with movements in the real values of their
home currencies in the international currency markets. This would
increase the profitability of the local stock markets, it would make
this country's exports much more attractive, and it would be great for
GDP. Then what are the drawbacks of a country constantly devaluing
their currency? Has the Chinese seen the disadvantages of their yuan
policy?
NOTE: The Chinese have often been accused of weakening their Yuan
currency too much. |
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| The Trucker |
| Posted: Tue Dec 06, 2005 1:31 pm |
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"Brablo" <gestureofrespect@yahoo.com> wrote in message
news:1133875977.121171.222190@g47g2000cwa.googlegroups.com...
[quote:35f0409313]What are the disadvantages of depreciating in real terms a domestic
currency? I read that the valuation of a stock index whose costs are
laregly incurred domestically but earn significant revenues in foreign
markets or who face international competition in their home market tend
to be negatively correlated with movements in the real values of their
home currencies in the international currency markets. This would
increase the profitability of the local stock markets, it would make
this country's exports much more attractive, and it would be great for
GDP. Then what are the drawbacks of a country constantly devaluing
their currency? Has the Chinese seen the disadvantages of their yuan
policy?
NOTE: The Chinese have often been accused of weakening their Yuan
currency too much.
[/quote:35f0409313]
We have the best congress money can buy. The Chinese
have a lot of money (T-Bills are "near money"). Perhaps
you should think about this. The proper answer to the
problem will be found @ GreaterVoice.org.
--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org |
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