The new trend countries follow is to keep their currency low, for its positive influence it can have on export markets. However this trend can go a bit too far and create an unfair market situation.
A very recurrent topic in the pesidential debates lately is the currency of China. Mr. Romney has the opinion that China is manipulating the economy by keeping their currency (renminbi) very low. Consequently the price of their goods are low and they have a big advantage in the marketplace. His point of view is not supported by many economists. The situation is not anymore that extreme: The International Monetary Fund now considers the renminbi only “moderately undervalued”. This could be a strategy of the chinese government to prevent political reaction in the US.Authors: Élodie Oulevey, Nadine Mülhauser
Powerpoint: The role of currency markets