Yuan target of greedy speculators
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The over-indulgent attitude of the US and UK governments toward speculators has caused people in those two countries to suffer, too. In the US, more than 20 million people are homeless because of the wrong policies of financial enterprises. The incomes of hundreds of thousands of people dependent on the financial industry have fallen because of the international loss of trust in UK's financial institutions.
Yet these very entities are demanding that China revaluate its currency. Don't they know it would only help speculators to make bigger profits? Don't they know about the damage their lax policies have caused to the international economy?
Until people who speculate in currencies and commodities are punished, the international economy will continue to tether on the edge of collapse. To avoid rewarding such vultures, China should keep the yuan steady this year. At the most, it could raise it by 5 percent.
Lest we forget, the 1997 Asian financial crisis battered countries such as Thailand and Indonesia because they followed the advice of so-called experts in New York and London, whereas countries like China and India escaped the ill wind because they refused to heed such advice.
Nearly a third of the $4 trillion lost in the global financial crisis came from Arab investors. This shows money assets of international investors are not safe in institutions that for decades have been the main repositories of savings. The top managers of these institutions use that money to speculate in order to make huge profits. There is therefore a strong case for China, India, the Gulf Cooperation Council (GCC) and South Korea to come together to ensure that their surplus funds are used in the safest way. Plus, the new financial entities created by these countries would boost cooperation within Asia.
Speculators hiked the price of crude (something they are doing once again) and blamed China and India for it, saying oil price has risen because people in the two countries were using more fuel. They hiked commodity prices, which has hurt billions of people in the poorer countries, and tried to put the blame again on China and India.
Speculators have used the funds placed trustingly in their care by Arab, Russian, Indian and other investors to create havoc in commodity markets and later in the financial markets. Such people must never again be entrusted with other people's money. The advice of officials who looked the other way while the loot was going on should never again be heeded. China, India, the GCC and South Korea should join hands to defeat the speculators' designs and prevent them from walking away with huge profits at the expense of their economies. One way of doing that is not to revaluate the yuan in 2010.
The author is vice-chair, Manipal Advanced Research Group, UNESCO Peace chair and professor of Geopolitics, Manipal University.
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