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Is it just me, or can nobody agree on the true value of the Chinese currency?For years, China's currency was deemed to be undervalued because its " external position" looked obviously unbalanced.Since the global financial crisis it has become clear that China's interests are more aligned with those of its trade partners, particularly the US, than previously appreciated. China, it turns out, has no interest in causing a run on the dollar because that would devalue the bulk of its foreign reserves -- making it significantly poorer on the international stage. Exactly: China has as much of an interest in maximizing the purchasing power of the US dollar as the US has in not defaulting.Because participating would suggest its currency and economy was stable enough to be deemed an international reserve asset. China wants reserve status to open the door to settling trade agreements in its own currency.
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