Tuesday, January 10, 2006

China Set To Reduce Exposure To Dollar

Washington Post reports on China's progress on switching away from the dollar. The key quote for me is:

Were China and Japan to engineer a significant fall in the dollar, those nations also would suffer the consequences -- sharply diminished exports as Americans lose spending power, plus a drop in the value of their dollar assets.

Gotta remember that the success of these countries depends on their stuff being cheap to buy. Devaluing the dollar is only in their interests if they have the self-capacity to continue strong development without this dependency. South Korea is in the same state.

When will this state arrive though? Will it ever? Or will things just settle into an uneven state of off-balance once the currencies start evening out?

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