You are not alone. The renminbi is with you. But it has managed to pull off the impressive trick of being a lot less undervalued without actually having risen very much.
The IMF said this week what others (especially the Peterson Institute, whose estimates often get a lot of airtime on Capitol Hill) have also suggested: the RMB is a lot less undervalued than a year ago. The Fund, which now combines various different concepts of currency valuation to take a judgment, called it “modestly undervalued” without putting a number on it.
The Peterson gurus are less coy: they reckon the RMB needs to rise just 2.8 per cent in real trade-weighted terms (i.e. against a basket of currencies, adjusting for inflation), and by 7.7 per cent against the dollar, to achieve a sustainable external position. These are big changes from a year ago, where the trade-weighted and dollar undervaluations were 16 per cent and 28.5 per cent respectively. (Naturally these changes don’t seem to have made much difference to the China-bashers in Congress or out on the campaign trail, who tend to use the Peterson estimates when it suits them and ignore them otherwise.) Read more
Articles you might want to take a look at today:
An amusing little row has broken over the head of the Romney campaign, just as the candidate arrives in Britain for the Olympic opening ceremony. A Romney foreign-policy adviser has been quoted in Britain’s Daily Telegraph, saying that Romney will lay more emphasis on a Special Relationship with Britain because:
“We are part of an Anglo-Saxon heritage, and he feels that the special relationship is special,” the adviser said of Mr. Romney, adding: “The White House didn’t fully appreciate the shared history we have.”
This quote has been condemned by some Obama supporters as implicitly racist and has even drawn condemnation from Vice-President Joe Biden. The Romney campaign has moved swiftly to distance itself from this rather maladroit statement.
So which Romney adviser aired these views? Suspicion swiftly fell on Nile Gardiner, a Brit who works at the Heritage Foundation and has been named as one of Romney’s foreign-policy advisory team. Gardiner blogs for the Telegraph and has admitted speaking to the Telegraph journalist who wrote the story – but, despite strong circumstantial evidence, denied being the source of the quote. Read more