Currency Speculations

Discussion in 'Business & Economics' started by Eluminate, Apr 13, 2004.

  1. Eluminate Registered Senior Member

    Messages:
    359
    Anyone with a currency speculation scenario is welcome to post here
    try to give reasons and maybe a link if you could so we could see the points of your argument better.

    I personally think it would be interesting if the pound ever went over 2 dollar threshold and maybe even 2 euro treashold this would be intensely interesting althought i have no clue of the exact ramifications that would occur.

    Also if anyone can give some factors that effect currencies and the way the fluctuate.

    Another interesting thing would be if the chinese Yuan doubled from 8.28 to the dollar to 4.14 to the dollar this would in effect be the death knell for their worker costs.
     
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  3. guthrie paradox generator Registered Senior Member

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    It would be interesting. but would also demonstrate a world economic system out of kilter. if it got that bad, the USA's economy would clearly be in dire straits, as would the EU's.

    And yes, I am sure the Yuan is undervalued, isnt it being artificially depressed?
     
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  5. Eluminate Registered Senior Member

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    yep its artificially depressed but if it becomes too appreciated which will eventually come to be since it was held down way too long they will begin to loose capital inflows which their banking system needs severely. Their bad loans are at over 400 bil dollars and they cant afford a slowing in the ecconomy before the banking system is revamped and rejuiced through foreighn capital. This will not occur though since most foreighn investors want the bad debt off first so they are screwed just hoping out that time will help them consume the problem before it finally becomes fully apparent.

    So what I think will happen there will be a spillage effect they will try to float yuan a little at a time which will not be enough to convince investors this process would be accelerated and get out of control the Yuan would skyrocket all capital inflows would become depressed by 20-30% the banking system would be stretched to the limit. I m not sure what currency they are holding their foreighn debt in but if its dollars they would be totally screwed. After the system faultered and they would need to suspend some sort of a trading mechanism the yuan would fall as well nowhere near previous levels but create widespread panic and severe financial pains. All this would probably span over 6 months. This is all hypothetical. In the end I figure their debt load would feel one and a half times more then it is now and would take probably twice as long to pay down then before yuan appreciated. Also their exports would fall in real net terms trade gap wise.
     
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  7. Undecided Banned Banned

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    The US$ is going back up, the Yen is also going up, and the Yuan should be going up as well. China will not put the Yuan up soon imo, but I do see the stresses pushing China within the decade. The Latin American currencies want to be depressed. The biggest question is if the Islamic world would adopt one currency like Malaysia says it should. If it does, then it would more then a competitor to the US$, the Euro, and the Pound.
     
  8. cosmictraveler Be kind to yourself always. Valued Senior Member

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    If the Euro goes up it will sharply reduce the amount of exports, if it goes down it will increase exports.

    Same with the dollar, the higher its value the harder it will be to export.

    China should adopt new currency soon.
     
  9. Eluminate Registered Senior Member

    Messages:
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    i was more wondering about the direct implications and specific things leading to various surges up or down. Like various developments that lead to this or that thing occuring. For example I feel that worldwide food prices going up will lead to China eventually having a higher trade outflow in that particular sector that will benefit countries like Australia, Canada, US, New Zealand and other major food exporters to the south asia markets. Topple that with oil increases and energy needs escalating by manufactoring expansion and you might see a narrowing of the export, import outflows in monetary terms. This would effectively lock china in a wheel like a hamster that must run and constantly export just to stay afloat. Pile that with fragile banking environment and you create a dependant major ecconomy thats locked into work for food operration which cannot dominate the price environment on the exports it ships out.
     

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