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

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#1 Wed, May 23, 2012 - 5:38pm
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: pourty on Nov 8, 2014 - 5:01am
Wed, May 23, 2012 - 5:38pm
pourty
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