Benn Steil


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China’s Currency Head Fake

August 2, 2010

In the run-up to the June G20 summit in Toronto, China came under significant U.S. pressure to loosen its currency peg to the dollar. “The administration constructively set the G20 meeting as an important juncture for China to change its inflexible currency practices,” said Sander Levin, chairman of the House Ways and Means Committee on June 16th. “If China does not act and the administration does not respond thereafter, the Congress will act.” Then one week before the summit, China announced that it would relax the peg, and indeed the renminbi (RMB) began to rise. The political tension dissipated. Yet since July 2nd, five days after the summit, the RMB has ceased rising. It would appear that the much lauded Chinese currency pledge was a pre-summit head fake.

Steil, Swartz: Dollar Reserves Cost Japan and China
Economist: Yuanimpressed
Beattie: Congress Threat Grows of China Currency Law
Dyer: China Currency Dispute Has Not Gone Away

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  • Posted by Goldbug

    The real head fake comes when China announces they will back the RMB with silver. China has embraced silver longer than gold going back 1000’s of years.

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