{"id":18351,"date":"2016-02-27T10:59:03","date_gmt":"2016-02-27T15:59:03","guid":{"rendered":"http:\/\/olduvai.ca\/?p=18351"},"modified":"2016-02-27T11:10:03","modified_gmt":"2016-02-27T16:10:03","slug":"the-fx-mexican-standoff","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=18351","title":{"rendered":"The FX Mexican Standoff"},"content":{"rendered":"
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The FX Mexican Standoff<\/a><\/h3>\n<\/div>\n<\/header>\n

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Theodor Horydczak\u00a0Lincoln Memorial\u00a0<\/b>1925<\/div>\n

There has been quite a bit of talk lately over the need for a new Plaza Accord, something several parties saw happening during this weekend\u2019s G20 summit in Shanghai -hence the term \u2018Shanghai Accord\u2019-. (On September 22, 1985 at the Plaza Hotel in New York City, France, West Germany, Japan, the US, and the UK signed an accord to depreciate the US dollar vs the Japanese yen and German Deutschmark by intervening in currency markets).<\/p>\n

Unless all the G20 finance ministers and central bankers gathered in China are in close and secretive cahoots, though, it doesn\u2019t look like it is going to happen. And that seems to both make sense and not. What those advocating such an accord are calling for is a -large- devaluation of the Chinese yuan (RMB) vs the USD and yen -perhaps even the euro-, but the climate simply doesn\u2019t look ripe for it.<\/p>\n

Still, the problem is, if they don\u2019t do it, they open the doors to a whole lot more volatility, unpredictability and losses in the markets. All things that those markets do not want. Because, like it or not, the yuan is overvalued, China\u2019s fabricated trade numbers are increasingly under scrutiny, and a large devaluation could settle things at least for a while.<\/p>\n

However, Beijing looks too full of hubris and pride -and inclusion in the IMF basket of currencies is an issue too- to do what seems natural. Lest we forget, no matter how much China seeks to obfuscate the numbers, everybody already knows that numbers like producer prices and exports, and most importantly imports, have seen steep falls, and for a long time too.<\/p>\n

China\u2019s oil tanks look as close to overflowing as the American ones, and without those oil imports, who knows who bad import numbers would have looked?<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The FX Mexican Standoff Theodor Horydczak\u00a0Lincoln Memorial\u00a01925 There has been quite a bit of talk lately over the need for a new Plaza Accord, something several parties saw happening during this weekend\u2019s G20 summit in Shanghai -hence the term \u2018Shanghai Accord\u2019-. (On September 22, 1985 at the Plaza Hotel in New York City, France, West […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[130,951,188,2022,344,359,418,434,452,517,12688,7738,3389,834,1031],"class_list":["post-18351","post","type-post","status-publish","format-standard","hentry","category-economics","tag-china","tag-currency","tag-currency-war","tag-fx","tag-g20","tag-germany","tag-imf","tag-international-monetary-fund","tag-japan","tag-mexico","tag-plaza-accord","tag-raul-meijer","tag-shanghai","tag-us","tag-yuan"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18351","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18351"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18351\/revisions"}],"predecessor-version":[{"id":18353,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18351\/revisions\/18353"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18351"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18351"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18351"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}