A prominent People’s Bank of China official has made headlines by arguing Beijing should guide the yuan higher. His reasoning? To tame the effects of surging global commodity prices.
Lyu Jinzhong, the PBOC’s director of research and statistics, has the right idea – expressed in a China Finance article – as markets everywhere quake over intensifying inflation pressures. But though he has the right idea, he has the wrong country.
Much good globally might come from the US Treasury Department and the Federal Reserve re-establishing the strong dollar policy. It is one that served the globe well for 23 years until Donald Trump came along and acted more like a leader in Buenos Aries than Washington.
For a president of one of the most developed economies, Trump had a patently developing-nation view of exchange rates. On the campaign trail in 2016, candidate Trump rarely missed a chance to complain that an “undervalued” yuan is “killing” American living standards. He also complained about yen and euro rates he felt were too low.