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Comcast Corporation Message Board

  • whatilearn1234 whatilearn1234 Jan 12, 2010 11:48 PM Flag

    China's main purpose is not to raise RMB value.


    Recent 0.5% interest rate increase on the wealthy in China will definitely force RMB value to increase. But China does not want RMB value to increase. Why do they still raise their interest rates?

    Here is the simple answer.

    Recent appreciation trend of U.S. Dollar cause the Chinese government to think. I think Chinese government's main purpose is that they want to increase their U.S. Dollar porfolios. I think they start to increase their interest rate ahead of global nation's Fed is to attract more foreign funds to China. Therefore after foreign funds went into China, China's government then have more funds to tranfer to U.S. Dollar porfolios. This way RMB value will not increase and Chinese government will have more funds to put into U.S. dollar based porfolios to wait for it to appreciate.

    Just a guess.

    This topic is deleted.
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