In responding to the global financial meltdown from 2008 onwards, countries were implementing different measures to keep their economies staying alive. Other than the multi-billions or even up to trillions of government sponsored stimulus packages to boost domestic spending and revive respective economies, many countries especially export-dependent economies have also chosen to devalue their currencies to maintain their export competitiveness or to achieve other political agendas.
In 30th Nov of last year, North Korea announced the plan to devalue the currency (North Korea won) by 100 to 1 by rolling out 10 won of notes to replace the existing notes of 1,000 North Korea Won. This measure was practically equivalent to wiping out the savings for the people of North Korea. On hearing the announcement, the people in the country rushed out to convert their local currency to the RMB or USD to protect their savings. There were also cases reported that there were people committed suicide for the fear of losing the entire savings.
Venezuela announced on the 8th Jan 2010 that the government‘s intention to implement a dual system for a fixed rate Bolivar by devaluing the currency from the 2.15 per dollar, in place since 2005, to the range of 2.6 and 4.3 per dollar. Exchange rate for essential goods such as food, medicine etc will be devalued to 2.6 per dollar, while the exchange rate for the non-essential goods (such as imported cars) and services will be devalued to the 4.3 bolivar per dollar. The currency devaluation, according to the President Hugo Chavez , is expected to boost the export while discouraging the people from buying non-essential imports. After the announcements, it was reported that Venezuelans flocked to shops to buy appliances, electronics and other import items in anticipating of the upcoming price revisions.
China, the world biggest exporter that surpassed Germany in 2009, has chosen to peg its renminbi at about 6.8 yuan to the US dollar during the recent financial crisis to boost its exports. The monetary policy has attracted many criticisms especially from the US and Europe. Paul Krugman, the Nobel prize winner in 2008, in his recent new year article, openly criticized China’s stand in devaluing the renminbi and blamed that this had created unfair advantages to China and had "stolen" 1.4 mil jobs from the US over years. The western countries are seemed to be standing together to force the fastest growing economy to appreciate its currency. This appears to lot of people as another plot from the west similar to what they have done to Japan which resulted to Plaza Accord in 1985 and the subsequent leading to the asset price bubbles and the eventual lost decade for Japan. The difference now is the victim is changed from Japan to China. All eyes are now on China on when and how much the country will appreciate its currency to ease the inflationary pressure as well as the mounting pressures from the West.
In 30th Nov of last year, North Korea announced the plan to devalue the currency (North Korea won) by 100 to 1 by rolling out 10 won of notes to replace the existing notes of 1,000 North Korea Won. This measure was practically equivalent to wiping out the savings for the people of North Korea. On hearing the announcement, the people in the country rushed out to convert their local currency to the RMB or USD to protect their savings. There were also cases reported that there were people committed suicide for the fear of losing the entire savings.
Venezuela announced on the 8th Jan 2010 that the government‘s intention to implement a dual system for a fixed rate Bolivar by devaluing the currency from the 2.15 per dollar, in place since 2005, to the range of 2.6 and 4.3 per dollar. Exchange rate for essential goods such as food, medicine etc will be devalued to 2.6 per dollar, while the exchange rate for the non-essential goods (such as imported cars) and services will be devalued to the 4.3 bolivar per dollar. The currency devaluation, according to the President Hugo Chavez , is expected to boost the export while discouraging the people from buying non-essential imports. After the announcements, it was reported that Venezuelans flocked to shops to buy appliances, electronics and other import items in anticipating of the upcoming price revisions.
China, the world biggest exporter that surpassed Germany in 2009, has chosen to peg its renminbi at about 6.8 yuan to the US dollar during the recent financial crisis to boost its exports. The monetary policy has attracted many criticisms especially from the US and Europe. Paul Krugman, the Nobel prize winner in 2008, in his recent new year article, openly criticized China’s stand in devaluing the renminbi and blamed that this had created unfair advantages to China and had "stolen" 1.4 mil jobs from the US over years. The western countries are seemed to be standing together to force the fastest growing economy to appreciate its currency. This appears to lot of people as another plot from the west similar to what they have done to Japan which resulted to Plaza Accord in 1985 and the subsequent leading to the asset price bubbles and the eventual lost decade for Japan. The difference now is the victim is changed from Japan to China. All eyes are now on China on when and how much the country will appreciate its currency to ease the inflationary pressure as well as the mounting pressures from the West.
Like it or not, average people like you and me are definitely impacted by currency movements, no matter in what directions. Nobody wants their hard-earned money to be wiped out when the country devalue its currency. On the other end, we should also be alert that the country which we are dealing with is expecting to appreciate its currency as the prices of goods and services will be higher. As far as I am concerned, the renminbi appreciation would blow by travel budget for my China vacation in April. It looks to me that it is definitely make sense for me to convert to renminbi now before the appreciation.
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