Yuan Revaluation Would Have 'Not Much' U.S. Impact

By John S. McClenahen David A. Rosenberg has done what he calls a "preliminary back-of-the-envelope" assessment of a 10% revaluation of the Chinese currency, the yuan, on the U.S. economy. "Not much" impact is his conclusion. "Within a year, we estimate that a 10% revaluation against the dollar would lift U.S. import prices by 0.5%, core PPI [Producer Price Index] by 0.1% and would have no impact at all on core CPI [Consumer Price Index], GDP or the current account [the broadest measure of the U.S. international economic position]." A 10% revaluation in the yuan is less than many critics of the Chinese currency have been advocating, however. They estimate the yuan is 20% to 40% undervalued relative to the U.S. dollar.

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