Comments on: Currencies pegged to the dollar under pressure to drop peg http://www.creditwritedowns.com/2009/10/currencies-pegged-to-the-dollar-under-pressure-to-drop-peg.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Hyperinflation, national bankruptcy, dollar crash and other exaggerations « naked capitalism http://www.creditwritedowns.com/2009/10/currencies-pegged-to-the-dollar-under-pressure-to-drop-peg.html#comment-6823 Hyperinflation, national bankruptcy, dollar crash and other exaggerations « naked capitalism Wed, 14 Oct 2009 20:28:59 +0000 http://www.creditwritedowns.com/2009/10/currencies-pegged-to-the-dollar-under-pressure-to-drop-peg.html#comment-6823 [...] helping the U.S. because the dollar is overvalued vis-a-vis a host of pegged currencies. And while those currencies are under pressure to drop the peg, they are resisting because they do not want to move toward a more re-balanced global growth [...] [...] helping the U.S. because the dollar is overvalued vis-a-vis a host of pegged currencies. And while those currencies are under pressure to drop the peg, they are resisting because they do not want to move toward a more re-balanced global growth [...]

]]> By: David http://www.creditwritedowns.com/2009/10/currencies-pegged-to-the-dollar-under-pressure-to-drop-peg.html#comment-57313 David Wed, 14 Oct 2009 04:16:00 +0000 http://www.creditwritedowns.com/2009/10/currencies-pegged-to-the-dollar-under-pressure-to-drop-peg.html#comment-57313 I'm curious what you think the probability of Hong Kong letting their currency float would be and within what timeframe? I’m curious what you think the probability of Hong Kong letting their currency float would be and within what timeframe?

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/10/currencies-pegged-to-the-dollar-under-pressure-to-drop-peg.html#comment-57305 Edward Harrison Wed, 14 Oct 2009 01:30:00 +0000 http://www.creditwritedowns.com/2009/10/currencies-pegged-to-the-dollar-under-pressure-to-drop-peg.html#comment-57305 Yes, the inflation is imported via commodity prices at a minimum. Moreover, to the degree that those countries do not turn around and buy up dollar assets with their dollars, this has led to inflation, particularly in the Mideast. Yes, the inflation is imported via commodity prices at a minimum. Moreover, to the degree that those countries do not turn around and buy up dollar assets with their dollars, this has led to inflation, particularly in the Mideast.

]]> By: kynikos http://www.creditwritedowns.com/2009/10/currencies-pegged-to-the-dollar-under-pressure-to-drop-peg.html#comment-57301 kynikos Tue, 13 Oct 2009 20:31:00 +0000 http://www.creditwritedowns.com/2009/10/currencies-pegged-to-the-dollar-under-pressure-to-drop-peg.html#comment-57301 I do not see any incentive for pegged countries to revalue. Are those countries facing <b>imported</b> inflation? Why would such countries want to remove their competitive advantage? Most people are focusing on the decline of the value of the dollar, but these countries are focused on the decline of the value of <b>labour</b> in the global labor market. In order for labor to be attractive, it must be cheap, and one way to do it is to have an undervalued currency. While imported inflation is an immediate concern, I do not see any primary reason to be concerned with a real estate bubble in Asian countries, unless there is evidence that people are using those assets as collateral for loans that cannot be serviced if real estate prices decline. BTW, here is an analysis about Saudi Arabia's peg written in 2007. http://www.saudi-us-relations.org/articles/2007/ioi/070904-bourland-dollar-1.html I do not see any incentive for pegged countries to revalue. Are those countries facing imported inflation? Why would such countries want to remove their competitive advantage? Most people are focusing on the decline of the value of the dollar, but these countries are focused on the decline of the value of labour in the global labor market. In order for labor to be attractive, it must be cheap, and one way to do it is to have an undervalued currency.

While imported inflation is an immediate concern, I do not see any primary reason to be concerned with a real estate bubble in Asian countries, unless there is evidence that people are using those assets as collateral for loans that cannot be serviced if real estate prices decline.

BTW, here is an analysis about Saudi Arabia’s peg written in 2007.

http://www.saudi-us-relations.org/articles/2007/ioi/070904-bourland-dollar-1.html

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