Chinese Currency Float limit raised from 0.5% to 1%...

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pourty
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Chinese Currency Float limit raised from 0.5% to 1%...

From Seeking Alpha: "China also widened the trading band for the yuan to 1% from 0.5%, which allows the yuan increased flexibility to fluctuate and is considered a major step toward paving the way for the yuan to eventually float freely."

Lindsey Williams keeps saying (heard him on 3 recent radio shows) that this is going to cause the price of Chinese-made goods in the US to effectively double in price.

I keep thinking: how can changing the trading limit by 0.5% cause 50% deflation in a currency?  Unless he also believes that it's just going to keep moving up and up against the dollar over time.  But he seems to be thinking that this will happen because 1% is 2X 0.5%...

Am I missing something?  I like Lindsey and I think he generally has his heart in the right place, but I'm thinking he's being a bit naive on this one...  hopefully not purposefully?

Edited by admin on 11/08/2014 - 06:01
pourty
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Article in question

http://seekingalpha.com/article/590741-the-evolution-of-yuan-policy

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