BRICs Biggest Currency Depreciation Since 1998 To Worsen

[Jade]

Wrong YET again.

What is fixed exchange rate? definition and meaning - Business Dictionary




I don't know where you got these weird ideas from. Every single definition on Earth shows that a Pegged exchange rate = Fixed exchange rate.

That is for the definition purpose. A fixed exchange rate is FIXED in a ideal world where there are no frictions. In a real world, Central banks would retain a degree of flexibility in a fixed exchange rate regime to absorb shocks. Let us say what happens when Dollar depreciates, so in this case the Peoples Bank of China can arrest the decline of Yuan by retaining the flexibility.

Let me ask you a question: Why is China is so vocal on using basket of foreign currencies as a reference?

 

[Chinese-Dragon]

That is for the definition purpose. A fixed exchange rate is FIXED in a ideal world where there are no frictions. In a real world, Central banks would retain a degree of flexibility in a fixed exchange rate regime to absorb shocks. Let us say what happens when Dollar depreciates, so in this case the Peoples Bank of China can arrest the decline of Yuan by retaining the flexibility.

Let me ask you a question: Why is China is so vocal on using basket of foreign currencies as a reference?

Why can't you just accept that you were wrong? According to every definition out there, Pegged exchange rate = Fixed exchange rate. They are the same thing.

And even from the currency charts that your Indian friend posted, it is clear that the Yuan has been appreciating strongly against the dollar, even during this current EU crisis.

So your explanation that the Yuan has not been depreciating during the EU crisis because it is pegged to the dollar, is clearly false.

 

[Jade]

Why can't you just accept that you were wrong? According to every definition out there, Pegged exchange rate = Fixed exchange rate. They are the same thing.

And even from the currency charts that your Indian friend posted, it is clear that the Yuan has been appreciating strongly against the dollar, even during this current EU crisis.

So your explanation that the Yuan has not been depreciating during the EU crisis because it is pegged to the dollar, is clearly false.

No, it is true. The graph is too smooth for Yuan to be floating.

 

[Chinese-Dragon]

No, it is true. The graph is too smooth for Yuan to be floating.

It is CLEARLY not a fixed exchange rate. Because the Yuan has been strongly appreciating against the dollar.

You Indians are really giving credit to all those Global IQ test results.

It is not either/or. In your mind, it is either "pegged" (fixed) or free floating... typical black and white thinking. Have you never heard of a "managed" exchange rate?

 

[Jade]

It is CLEARLY not a fixed exchange rate. Because the Yuan has been strongly appreciating against the dollar.

You Indians are really giving credit to all those Global IQ test results.

It is not either/or. In your mind, it is either "pegged" (fixed) or free floating... typical black and white thinking. Have you never heard of a "managed" exchange rate?

It seems you are not reading my posts. The following is the post #61

That is for the definition purpose. A fixed exchange rate is FIXED in a ideal world where there are no frictions. In a real world, Central banks would retain a degree of flexibility in a fixed exchange rate regime to absorb shocks. Let us say what happens when Dollar depreciates, so in this case the Peoples Bank of China can arrest the decline of Yuan by retaining the flexibility.

Let me ask you a question: Why is China is so vocal on using basket of foreign currencies as a reference?

 

[FairAndUnbiased]

It seems you are not reading my posts. The following is the post #61

You are still not getting it. The trend shows a consistent upward trend. That is not a peg. A 40% increase is not a peg. If it was a peg, then there'd be fluctuations around the target level, but not 40% swings to one side. However, a 40% decrease is also not a peg, but a peg for the INR to more stable currencies like the CNY is a good idea if this 'peg' would also appreciate the INR by 40% to make up for its 40% decline.

 

[Chinese-Dragon]

@ Jade, clearly you were lying here:

I'm afraid this EU crisis is fermenting and soon bring down all BRICs nations except China.

Unlike rupee, ruble or real, the reason why Yuan has not deprecated because it is pegged against the dollar

Since the Yuan is clearly not pegged to the dollar now during the EU crisis. In fact it is appreciating strongly against the dollar.

And here again, is the definition of a "pegged" exchange rate:

What is fixed exchange rate? definition and meaning - Business Dictionary

Fixed exchange rate:

System in which the value of a country's currency, in relation to the value of other currencies, is maintained at a fixed conversion rate through government intervention. Also called pegged exchange rate.

So Jade, you clearly have no idea what you are talking about.

 

[FairAndUnbiased]

@ Jade, clearly you were lying here:





Since the Yuan is clearly not pegged to the dollar now during the EU crisis. In fact it is appreciating strongly against the dollar.

And here again, is the definition of a "pegged" exchange rate:

What is fixed exchange rate? definition and meaning - Business Dictionary



So Jade, you clearly have no idea what you are talking about.

I find it really damn funny when Indians say "its a peg" and the currency shows a clear deviation. Hong Kong has a peg. Saudi Arabia has a peg. Their currency values fluctuate very closely to the target exchange rate. If your exchange rate is declining or increasing then its uh, not a peg.

 

[Chinese-Dragon]

I find it really damn funny when Indians say "its a peg" and the currency shows a clear deviation. Hong Kong has a peg. Saudi Arabia has a peg. Their currency values fluctuate very closely to the target exchange rate. If your exchange rate is declining or increasing then its uh, not a peg.

He wants to invent his own definition for the phrase "pegged exchange rate".

 

[Jade]

You are still not getting it. The trend shows a consistent upward trend. That is not a peg. A 40% increase is not a peg. If it was a peg, then there'd be fluctuations around the target level, but not 40% swings to one side. However, a 40% decrease is also not a peg, but a peg for the INR to more stable currencies like the CNY is a good idea if this 'peg' would also appreciate the INR by 40% to make up for its 40% decline.

Let us say People's bank pegs Yuan to 8.3 RMB a Dollar in 2005 and pegs to 6.3 RMB a dollar in 2012? Is this you call 25% appreciation. This managed. This is the problem US always had with China. It wanted to Yuan to floating so has to reflect its true value

 

[Chinese-Dragon]

Anyway, some good news for Indians:

Rupee plunges to lifetime low of 57.37, may even breach 58 soon - The Times of India

On the back of several downgrades, from both S&P as well as Fitch.

 

[Jade]

I find it really damn funny when Indians say "its a peg" and the currency shows a clear deviation. Hong Kong has a peg. Saudi Arabia has a peg. Their currency values fluctuate very closely to the target exchange rate. If your exchange rate is declining or increasing then its uh, not a peg.

Banks can change the peg value. Today 8.3 and tomorrow 6.2.

 

[FairAndUnbiased]

Let us say People's bank pegs Yuan to 8.3 RMB a Dollar in 2005 and pegs to 6.3 RMB a dollar in 2012? Is this you call 25% appreciation. This managed. This is the problem US always had with China. It wanted to Yuan to floating so has to reflect its true value

There is no peg though. In fact the PBOC just increased the trading band of the RMB. Also, if the peg doesn't reflect market realities, then the pegging currency would often lose credibility and decline in value (as occured in NK); the opposite is occuring, therefore there's no peg.

 

[Jade]

There is no peg though. In fact the PBOC just increased the trading band of the RMB. Also, if the peg doesn't reflect market realities, then the pegging currency would often lose credibility and decline in value (as occured in NK); the opposite is occuring, therefore there's no peg.

For this precise reason China is so vocal on using basket of foreign currencies as a reference as an international currency than US dollar

 

[Chinese-Dragon]

India tried to "manage" their currency recently:

India Forces Local Exporters to Buy Rupees in Move to Lift Currency - WSJ.com

Of course, it failed horribly. As we can all see.