China s Daring Depreciation

The financial sector was able to profit from the rising dollar, and a depreciation would have run counter to Ronald Reagan's administration's plans for bringing down inflation.

Its purpose is not to encourage the depreciation of the yen, despite complaints about the yen s depreciation.

But there is no question whatsoever that the US dollar will go south in the long run a depreciation that started in April 2002 and, after a short interval, resumed in March 2009.

Restoring sustained growth requires real currency depreciation.

And that means further depreciation of the dollar.

The extent of creditor countries losses would depend on the extent of the depreciation, giving them an interest in keeping the depreciation within bounds.

Dollar depreciation improves Europe s terms of trade and real income.

So we expect a substantial depreciation premium on US interest rates.

The depreciation that followed the crisis helped accelerate recovery by boosting exports.

But all of the options that might restore competitiveness require real currency depreciation.

Simply put, there must be dollar depreciation to keep global imbalances in check.

In principle, such a depreciation against all of the world s currencies is manageable.

A 20 dollar depreciation would therefore reduce Americans purchasing power by only 3 .

The depreciation expenses have gone up to 2.02 million against the budgeted amount of 0.9 million. The circumstances under which the depreciation expenses increased by 100 percent could not be satisfactorily explained to the Panel.

Depreciation is used to record the declining value of buildings and equipment over time.

With China retaining its under valued currency policy, dollar depreciation can aggravate global deflationary forces.

The attempt to achieve them is bound to lead to competitive currency depreciation and protectionism.

A return to a national currency and a sharp depreciation would quickly restore competitiveness and growth.

First, it contributes to yen depreciation and dollar appreciation as carry traders switch out of yen.

The yen s depreciation versus the dollar has contributed to continuing large US trade deficits with Japan.

Depreciation is computed using the straight line method over the estimated useful life of the asset.

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But, in the absence of complementary action, depreciation whether engineered or market driven will make matters worse.

Today, it costs 220 naira to buy one British pound, which implies 15 annual average depreciation since 1973.

Yet financial markets are not pricing dollar depreciation and a rise in long term US interest rates accordingly.

Corporate retained earnings have averaged about 3 of GDP after allowing for depreciation of existing plant and equipment.

The sharp depreciation of the euro after the crisis helped sustain German exports, thereby keeping the eurozone afloat.

The Europeans gladly went along with this charade because they now fear dollar depreciation more than global imbalance.

That is why I believe that these countries and the eurozone more generally would benefit from euro depreciation.

To maintain growth, they need a nominal and real depreciation of their currency to reduce their trade deficits.

In fact, Brazilians purchasing power could shrink further, owing to the depreciation of the real against the dollar.

Chile made its transition to high growth in the 1980 s on the back of a large depreciation.

When the bubble bursts, the afflicted country can restore competitiveness only through a painful process of real depreciation.

But the euro s depreciation is too recent to have made much difference yet. Historical evidence, not to mention Japan s experience with a falling yen, suggests that it takes several quarters, or even years, before the positive impact of currency depreciation on net exports is felt.

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WASHINGTON, DC Over the last several weeks, the dollar s depreciation against the euro and yen has grabbed global attention.

This could and should be accompanied by an overall depreciation of the euro, though that would be no panacea.

Only a return to a national currency and a sharp depreciation of that currency can restore competitiveness and growth.

Know ye not that they which run in a race run all, but one receiveth the prize? So run, that ye may obtain.

Terwa Marathon Run is an annual event run in late May (since 1989).

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