• 369 days Will The ECB Continue To Hike Rates?
  • 369 days Forbes: Aramco Remains Largest Company In The Middle East
  • 371 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 771 days Could Crypto Overtake Traditional Investment?
  • 776 days Americans Still Quitting Jobs At Record Pace
  • 778 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 781 days Is The Dollar Too Strong?
  • 781 days Big Tech Disappoints Investors on Earnings Calls
  • 782 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 784 days China Is Quietly Trying To Distance Itself From Russia
  • 784 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 788 days Crypto Investors Won Big In 2021
  • 788 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 789 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 791 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 792 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 795 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 796 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 796 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 798 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

Import Prices and the Renminbi - Let Sleeping Dogs Lie?

The chart below shows the behavior of U.S. import prices from the European Union, Japan and the Asian NICs (Hong Kong, Singapore, South Korea and Taiwan) in recent years. Notice that the growth in import prices from the European Union has far outpaced that from Japan and the Asian NICs. Of course, the principal explanation for this is that the dollar has depreciated more in recent years against the European Union currencies than against the Asian currencies. And, of course, the principal reason for these differences in dollar depreciation is that the European Union central banks have not intervened to prevent the rise in their currencies whereas the Asian central banks have intervened. If China finally relents and allows the renminbi to appreciate against the dollar, there is a high probability that other Asian monetary authorities will allow more appreciation of their currencies versus the dollar, too. In 2004, about 20% of our goods imports originated from the European Union while 33% originated from the Pacific Rim. Thus, a given percentage depreciation of the dollar versus Asian currencies would likely put more upward pressure on import prices and consumer prices than would a depreciation against European Union currencies. For the sake of U.S. inflation and Fed rate hikes, let's hope the Chinese resist our self-destructive harangues. (For a like opinion on our self-destructive ways with regard to the renminbi, see Phillip Swagel's op-ed piece "Yuan Answers?" in the June 10th edition of The Wall Street Journal.)

 

Back to homepage

Leave a comment

Leave a comment