Effect on markets of RMB appreciation?

Discussion in 'Trading' started by benwm, Mar 8, 2010.

  1. benwm


    What will happen if China allows its currency to strengthen this year?

    Currently there is a positive correlation between stocks and commodities but RMB appreciation could lead to:-

    Commodities in $ prices UP as now cheaper for China to buy
    stocks DOWN due to the 'signaling' effect of a tighter monetary policy in China?

    I guess $ and US Treasuries will selloff initially, a lot would depend on whether RMB appreciation is large (10%) and deemed one-off, or small (2%) with expectations of further gradual gains...

    Does anyone recall what happened the last time RMB strengthened?