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The Risk Of Exchange Rate Dumping From America

Since this March RMB actual exchange rate has devalued by 7.6%, but such a situation is not caused by China but affection of America’s Exchange Rate Dumping policy to let dollars devalue freely. Because in a big part China trade construction is affected by USD, so when the dollar devalued by more than 11.9% since the entering office of Obama RMB has to devalue too as the 14 months of dropping of USDX. However, such a serious USD devaluation situation is desired by America. For America the benefits of this behavior are the following: stimulate the goods service trade export of America, narrow the trade deficit and adverse balance of project; help America lower the debt in a changeable way. The reducing of debt means the revaluation of foreign capital, so the benefits of America is obvious.

However, such a way to escape from crisis is not all good to America. If America keeps devalue like this then the key position in international currency of USD will be doubted. Moreover, this is not the only way to escape from crisis for America.

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