By James McKee
In the recent G20 summit it was decided that smaller countries would have a say in what occurs with the regard to the International Monetary Fund. Emerging economies such as India are fairing better than those of developed western nations. Among the large developments in the G20 was the urging of China to allow its currency to appreciate, but their was opposition to this idea because more expensive Chinese imports would make it difficult for emerging countries to purchase their goods. If China’s money were to appreciate it would also cause the value of the USD to rise since the two are stapled to one another.
While the Indian Finance Minister feels that the IMF is making an effort to include emerging nations in its decision making process he feels that they have a long way to go. Developed nations still account for the vast majority of voting power and decision making with regard to the IMF and as emerging nations have more and more of an impact on the world’s economies they are indeed having a say in what occurs. Whether or not this is occurring fast enough to accommodate will be left to history to decide.
The current attitude overall at the G20 summit was an optimistic one, speaking of the need for all countries to take part in the economic recovery of the world. It is being said that China is not doing their part because they are holding on to their currency reserves and not spending it; this maintains the low-cost of their products while their producers lose money. For a long time China has been seen as an un-cooperative partner with regard to the recovery of the world economy for this reason.
The G20 and its fallout will have numerous repercussions for the Forex exchange including a USD that may actually continue to rise. A great deal of what comes out of the G20 summit relies solely on what China decides to do with the Yuan. If they begin to spend more money it will rise, if they continue to hold out the Yuan will remain low. For China’s own prosperity the Yuan should stay low, however with mounting pressure from other nations China may actually allow it to rise, only time will tell.
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.
