Question

Not only do economists think that the United States should take action to correct China’s currency undervaluation, they speak of it with urgency, stating that it is “critically important that we act now.” From their point of view, briefly explain why we must not wait any longer to take action. Just recently the ruble in Russia has been falling vs the US dollar. What can Russia do to aid their currency?

Answer 1

It is important to act in opportune time as Yuan depreciation by China means higher exports and again dumping regime starts as their products become cheaper and globally competitive and thus causes huge trade deficit to US as the global market share gets eaten up by Chinese counterparts.

Secondly falling russian ruble needs appreciation against US dollars and the best way is to increase interest rates higher to US Fes and subsequently boost exports by offering incentivesaand cutting duties. Rising interest rates propels and provokes investors to invest pumping money into Russia causing rubles demand to surge and thus leads to appreciation. Also curbing excessive imports from Us can help in appreciation.

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