May 24, 2012

Currency Stories: India and China


I am skeptical about all the song and dance about the falling rupee.

Is India's economy on a fundamentally different trajectory than China's?

What is the direction that the experts are hoping India's economy should take?

What is going to be the path of India's development?

The weak rupee probably makes it costlier to go on those frequent trips to Davos -- at least for the private sector who have to pay for their trips themselves.

In all this tsunami of talk about the collapse of the rupee, we seem to have all forgotten about the China story which otherwise somewhere seems to be there almost as an alter ego.



China keeps its currency strong, artificially strong. It uses currency policy in a way that it perceives as being beneficial to the country.

Some details as to Chinese policy are here http://www.brookings.edu/up-front/posts/2011/09/07-china-currency-kroeber.

Here's a detailed look at the China vs. US situation with particular emphasis on Chinese currency policy.

http://www.fas.org/sgp/crs/row/RS21625.pdf

Here's Paul Krugman talking about the Chinese currency.

http://www.nytimes.com/2010/03/15/opinion/15krugman.html

Here's one more instance of Paul Krugman being critical of an artificially low Chinese renminbi.

http://www.nytimes.com/2010/06/25/opinion/25krugman.html

Here's one more column where Krugman criticizes China for keeping its currency low.

http://www.nytimes.com/2010/09/13/opinion/13krugman.html

Here's Krugman talking about legislative action in the US Congress.

http://www.nytimes.com/2010/10/01/opinion/01krugman.html




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