Monday, October 04, 2004

Last week, during the lead-up to the G7 meeting in Washington, it looked as if China might actually start planning for an upward revaluation of the renminbi. In respone, the dollar (major currencyies index) fell to its lowest point since early April. But never fear. It looks like that revaluation talk was about as nutritious as a moon cake.
The consensus view was that the dollar had fallen on Thursday and Friday on the possibility that China might edge towards currency flexibility at the G7 meeting in Washington, a policy that could usher in a long-awaited dollar correction against a basket of resurgent Asian currencies.

In the event, a comment from Li Ruogo, deputy governor of the People�s Bank of China - "China has an 8,000-year history, a decade is truly a short period" - summed up the lack of movement from Beijing.
Hmm, maybe we should extend the bet on the renminbi revaluation. Say, within the next 500 years?

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