Re:Argentina restricts online shopping as foreign reserves drop
by nickff on Wednesday January 22, 2014 @02:26AM
(#7101304)
If the exporters are being subsidized, China would have to be depleting its foreign currency reserves for as long as the policy is in place.
Re:Argentina restricts online shopping as foreign reserves drop
by rahimnathwani on Wednesday January 22, 2014 @02:50AM
(#7101354)
China's trade surplus was more than 4 _trillion_ USD in 2013.
Exporters use USD (which they receive from overseas buyers) to buy CNY. Those USD add to China's foreign currency reserves.
So, the open market value of a peso is about 0.10 USD. The official value is 0.15USD.
The official value of 1 peso (0.15USD) is higher than the open market price (0.10USD). Thus the government is overvaluing the peso.
In contrast, 1 CNY is currently worth (0.17USD), i.e. similar to the official value of 1 peso. However, some people argue that it should be worth much more (e.g. 0.25USD).
In your example, exporters are getting screwed through an implicit tax. In my example, exporters are getting an implicit subsidy.