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Depreciating dollar hits market
By Yi Xianrong (China Daily)
Updated: 2008-04-30 09:30 Meanwhile, the appreciation of renminbi exchange on the international market in recent years is only against the US dollar, whereas it has actually depreciated against other major currencies. As renminbi appreciated against the US dollar in recent years, the range of the latter's depreciation against other major currencies was even larger. For instance, the US dollar has depreciated dramatically against the euro since 2002, from $0.89 to $1.56 for a euro or a drop of 75 percent. The US dollar exchange rate has also seriously depreciated against major currencies such as the Australian dollar, New Zealand dollar, British pound and Canadian dollar. Such heavy depreciation of the US dollar against major currencies not only canceled off the effect of renminbi's appreciation against the US dollar but also destabilized the whole international financial market big time. The serious depreciation of the US dollar against major currencies turned the whole international financial market upside down and set off a range of potential crises there. At the World Bank-International Monetary Fund Joint Development Committee meeting held on April 13, China's Deputy Finance Minister Li Yong called on the World Bank and the International Monetary Fund to urge developed nations to implement responsible monetary and exchange rate policies so as to overcome any financial crisis. This is one of the latest direct official responses from China to developed countries' monetary policies. Under mounting pressure from huge foreign debts and problems in domestic economic development, the US government has resorted to the "weak dollar policy", while many US lawmakers and government officials tirelessly pressured China to appreciate renminbi in recent years. Their efforts have increased significantly since the subprime crisis erupted. By letting the dollar depreciate at will in recent years the US government has not only hurt the world economy but also caused the latest global economic slowdown. The serious depreciation of the American dollar has rocked the whole international financial market and put major economies of the world at risk of flagging economic growth as well as worsening inflation. The fast depreciation of the US dollar has surely caused extreme panic throughout the world financial market, which led to wild rises and falls of foreign currency, stock, oil and gold prices. It has also pushed bulk rates of commodities sky high, giving rise to inflation in major economies of the world. While allowing Americans to indulge in a borrowing carnival, this "weak dollar policy" also resulted in their attempt to use the dollar depreciation to deal with the property market bubble and pass their debts to others or other countries. Many of the problems found in the international financial market are results of the drastic depreciation of the US dollar. The US government looks as if it was letting the dollar to float freely according to market fluctuation, but in fact it is the sole culprit of problems caused by its "weak dollar policy". Unless it assumes the right attitude and takes proper actions to address this pressing issue immediately, the US government will be held responsible for whatever damage its irresponsible policy causes around the world, such as the serious loss of China's foreign reserve (value) on a daily basis and gross deformation and destabilization of the international financial market pricing mechanism, which has disrupted the international financial market and caused deadly potential crises there. (For more biz stories, please visit Industries)
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