Comments
2 Responses to “International Foreign Reserves: Solving the Global Reserve Problem”
  1. hishamh says:

    One correction and one comment:

    1. The yuan/renminbi devaluation (it wasn’t a depreciation) occurred in January 1994. I don’t doubt the causal link between the devaluation and the downward pressure on other Asian currencies, but it took some time for the impact to be manifest.

    2. I’m leery of using PPP as an adequate measure for currency misalignment – don’t take the Big Mac Index seriously, The Economist doesn’t. Note that the IMF doesn’t think so either. Details here (warning: PDF link).

    Otherwise, a good analysis.

    • jamesesz says:

      Thank you for correcting my mistake on the yuan. You are right, it happened in 1994. It is by mid-1997 that it was felt.

      Again, you are right about the Big Mac index. However, I believe that the currencies in East Asia are still undervalued. Bear in mind that most of them are not internationally traded.

      But thanks for pointing that out! I understand there are other factors like labor costs to be considered. Your blog is great too!!

      James Ee

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