{"id":19850,"date":"2011-02-28T16:43:28","date_gmt":"2011-02-28T21:43:28","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=19850"},"modified":"2011-02-28T16:43:28","modified_gmt":"2011-02-28T21:43:28","slug":"are-asian-currencies-massively-undervalued","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/02\/28\/are-asian-currencies-massively-undervalued\/","title":{"rendered":"Are Asian Currencies Massively Undervalued?"},"content":{"rendered":"

By Justice Litle, Editorial Director, Taipan Publishing Group, taipanpublishinggroup.com<\/span><\/strong><\/a><\/p>\n

China’s currency is 35% cheaper (if not more) than it was in 1993. Is a protectionist backlash in the cards?<\/em><\/strong><\/p>\n

Earlier this month, Tudor Investment Corp. sent an interesting piece of research to clients. The gist — China’s currency is undervalued in a very big way.<\/p>\n

According to measures based on productivity and purchasing power parity, or PPP, the Chinese renminbi (RMB) is 35% to 72% cheaper than it was in 1993.<\/p>\n

How many things can you think of that have gotten at least a third cheaper, and possibly more than two-thirds cheaper, over the past 18 years? Apart from technology and data storage costs, there isn’t a whole lot.<\/p>\n

And yet, if Tudor’s research is sound, that’s how much China’s currency<\/a> has dropped relative to the buck.<\/p>\n

Tudor sees this devaluation as “a major, if not the primary, contributing factor to the nearly 6 million lost jobs suffered in the United States’ manufacturing sector.”<\/p>\n

U.S. manufacturing employees, in other words, have been subject to a job-grabbing “currency war” that has gone on for nearly two decades. A cheaper currency means cheaper exports and higher sales, at a cost to higher-priced exporters who can’t compete.<\/p>\n

There is further argument that China devaluation has fed America’s debt woes. How? In at least four ways:<\/p>\n