what the heck does Devaluing their (China's) currency mean?

R

republicanchick

New member
I admit i am a moron when it comes to math, money issues, etc..

but i cannot figure out what it means that China "devalued their currency"


and why would that be a good thing (for them... or not a good thing 4 us)?


:think::confused:
 
Ktoyou

Ktoyou

Well-known member
Hall of Fame
China's economy grew 7% in the first half of 2015, which was half its pace in 2007. China's severe slowdown has crimped demand for commodities, reducing their prices. So countries that export oil and other commodities have been hit hardest, especially emerging markets. We expect the impacts of slower growth in China to continue to ripple through markets short term, as investors watch for signs of stabilization.
 
patrick jane

patrick jane

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Banned
Ktoyou said:
China's economy grew 7% in the first half of 2015, which was half its pace in 2007. China's severe slowdown has crimped demand for commodities, reducing their prices. So countries that export oil and other commodities have been hit hardest, especially emerging markets. We expect the impacts of slower growth in China to continue to ripple through markets short term, as investors watch for signs of stabilization.
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good luck to investors, hiding out now in US bonds. 23 other countries' markets are crashing, maybe 30 or more by monday. N. Korea is acting up again, plus all the other bad stuff in the world. but we're ok here -:noid:
 
RevTestament

RevTestament

New member
It usually means they printed more money.
This typically means that within the country there is some inflation, but in the mean time the prices of domestic products stays about the same. However, in the international market the value of their currency against currencies of other nations goes down ie is devalued, because there is more of it to buy a foreign money. So it takes more of their money to "buy" a foreign money, and hence to buy foreign goods. The result is that their people will be dissuaded from buying foreign products because the prices of these products will go up. In the mean time their local product prices stay the same for a few years until inflation brings their prices up within the country.
However, it also means their products become cheaper for foreign countries because it takes less foreign dollars to buy their money.

The net result of all this is they will tend to export more goods than they import which will bring more capital into the country, and make them richer. China has been doing this for 30 years once they learned how much it helps them grow.
 
R

republicanchick

New member
Ktoyou said:
China's economy grew 7% in the first half of 2015, which was half its pace in 2007. China's severe slowdown has crimped demand for commodities, reducing their prices. So countries that export oil and other commodities have been hit hardest, especially emerging markets. We expect the impacts of slower growth in China to continue to ripple through markets short term, as investors watch for signs of stabilization.
Click to expand...

uh.. again, I am an idiot when it comes to this kind of thing. Could u put this into English?


:cool:
 
R

republicanchick

New member
RevTestament said:
It usually means they printed more money.
This typically means that within the country there is some inflation, but in the mean time the prices of domestic products stays about the same. However, in the international market the value of their currency against currencies of other nations goes down ie is devalued, because there is more of it to buy a foreign money. So it takes more of their money to "buy" a foreign money, and hence to buy foreign goods. The result is that their people will be dissuaded from buying foreign products because the prices of these products will go up. In the mean time their local product prices stay the same for a few years until inflation brings their prices up within the country.
However, it also means their products become cheaper for foreign countries because it takes less foreign dollars to buy their money.

The net result of all this is they will tend to export more goods than they import which will bring more capital into the country, and make them richer. China has been doing this for 30 years once they learned how much it helps them grow.
Click to expand...

then I guess we should follow Trump's views on this
 
R

republicanchick

New member
actually, when I first heard about this devaluing of China's currency (devaluing their own), the first thing i thought of was printing more money..

:cool:

it's just that I forgot about that thought... today

Today is a peculiar day for me

I haven't had enough espresso....

not good....


__:cool:
 
Ktoyou

Ktoyou

Well-known member
Hall of Fame
Well we ship much of our coal to China, now that are not able to buy what we have to sell, so, coal miners lose jobs, our market is hurt. When they trade with us we see less return in investment because most investors have shares in international funds, usually mutual finds.

To offset this some invest in dollar traded funds; no one has investments in one box, and may will invest in bonds, as they have somewhat an inverse relationship with bonds.

Bonds ate better in downtrends, while stocks are better when the DOW is high.
 
R

republicanchick

New member
Ktoyou said:
Well we ship much of our coal to China, now that are not able to buy what we have to sell, so, coal miners lose jobs, our market is hurt. When they trade with us we see less return in investment because most investors have shares in international funds, usually mutual finds.

To offset this some incest in dollar traded funds; no one has investments in one box, and may will invest in bonds, as they have somewhat an inverse relationship with bonds.

Bonds ate better in downtrends, while stocks are better when the DOW is high.
Click to expand...

I don't get the highlighted.. typos, etc..

I have a foggy notion what mutual funds are... but

you have to write as though you were writing "Finances for Dummies"

I didn't have anyone like Hellary Clinton around as a child/young adult... to teach me how to game the system... or whatever u call it.. so now I am an ignorant maroon...

but at least I know how to vote... :cool: and stuff like that


_
 
RevTestament

RevTestament

New member
republicanchick said:
then I guess we should follow Trump's views on this
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I confess, I really don't know what his views on it are. We also did a lot of 'devaluing" of our currency in the crash as did most western nations. However, it did not have a net devaluing result because basically all the countries were doing it with us.
So we had some inflation in segments of the economy like commodities while deflation in other segments like housing, etc.

The typical reaction of politicians to China's devaluing is to threaten trade tariffs etc to make their goods more expensive, but since we need their products now, and lack the ability to make most of these products on our own anymore, that would only result in inflation and shortages which would be damaging.
IMHO there really is no good policy against it... just allow China to get richer, and eventually their people will import more products they don't have. They do that to some extent now. They may decide to import more of our gas, etc. Importing our gas would help us, and help their environment become much cleaner. Trump ought to promote that.
 
Mocking You

Mocking You

New member
Wow, lot of confusion on this thread.

Basically, when a country devalues their currency it means that it is worth a bit less than it used to be, when comparing it to other nation's currency. For example, (to make it simplistic) let's say that their currency can buy the same amount of consumer goods that our currency can buy, or:

100 yuan = 100 dollars
100 dollars = 100 yuan

So if you wanted to buy something from China that cost 100 yuan, it would cost you 100 dollars.

China then 'devalues' their currency 5%. Now:

105 yuan = 100 dollars
95 dollars = 100 yuan

Now to buy that same thing that cost 100 yuan it only costs an American 95 dollars. This means that Chinese made stuff is cheaper to buy for Americans. The hoped for result is that Americans will buy more Chinese stuff since it's "cheaper". So they're trying to stimulate their economy by making their goods cheaper for the rest of the world.

Conversely, American made goods priced at 100 dollars that previously cost the Chinese 100 yuan now costs them 105 yuan. That means the China will buy less American made stuff because it costs more.

We don't like it when China devalues their currency because it means less exports from the USA to them.
 
R

republicanchick

New member
Mocking You said:
Conversely, American made goods priced at 100 dollars that previously cost the Chinese 100 yuan now costs them 105 yuan. That means the China will buy less American made stuff because it costs more.

.
Click to expand...

ok, I guess I get it (I am math-challenged but sometimes being logical helps you in your math handicap... so I am usually OK, at least with simple math.. :).


in any case, some say Trump's idea to... wel, not sure I u/stand his idea re the economy and China... but apparently it involves not trading with them as much... or maybe tariffs?

some say this is not good for the US

One thing I know for sure, though, math challenged as I may be:

THE USA NEEDS TO GET THOSE COMPANIES BACK FROM OVERSEAS!!

and only a R president/Congress can (I mean: will) do such things..



++
 
H

HisServant

New member
It means that goods produced in China will be cheaper for the rest of the word to purchase.

While foreign companies trying to make inroads into selling goods in China just had their prices go up.. it will make it harder on them.
 
Ktoyou

Ktoyou

Well-known member
Hall of Fame
republicanchick said:
I don't get the highlighted.. typos, etc..

I have a foggy notion what mutual funds are... but

you have to write as though you were writing "Finances for Dummies"

I didn't have anyone like Hellary Clinton around as a child/young adult... to teach me how to game the system... or whatever u call it.. so now I am an ignorant maroon...

but at least I know how to vote... :cool: and stuff like that


_
Click to expand...

A mutual fund is a bunch of stock and bond shares, held by an investment house (institution), and sold as a block, usually balanced by finical analysts who choose what is both appealing and somewhat balanced.

For example, say you by stock in a car company, or energy company, then with oil sold at lower rates, you lose your investment in energy. Now with a mutual fund, you have many stocks, some with unrelated stocks, so some drop as oil drops and some rise, such as food companies. The reason investors by these funds is there is less risk

Mutual funds may be stock heavy, or bond heavy, or balanced. Often, when stock values drop, bonds rise. Now we have less bond value increase because the Fed keeps stating the interest is to raise. Bond always pay the interest rate, even when the bond value decreases. The other issue with bonds, they can be paid out, so, if you have a bond, it will always have the purchase value, yet it might be sold, your money returned and your receive no more interest.

People who invest, yet do not have much experience will invest more in bonds than stocks.

I think this is enough for you to digest now.
 
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