Expert says Asian nations face US political pressure
Currency expert Avinash Persaud takes issue with a common assumption in Washington that Asian currencies are under-valued versus the US dollar and says that, if anything, they are beginning to look expensive when viewed against fundamentals.
Mr Persaud, investment director for GAM in London, says claims that Asia enjoys an unfair trade advantage with the US are wrong-headed, and that the tendency to save too much is funding much of the growing trade surplus.
Also distorting the picture are speculative capital flows, much of it heading into the yuan in anticipation of a currency realignment.
The hot money bolsters bank liquidity, and adds to an inaccurate picture of what's going on.
Still not convinced? Then why do Asian countries like China have balanced trade or even a trade deficit with the rest of the world, he asks? When Asians stop funding US consumption by exporting their savings, America's tendency to spend more than it earns should naturally right itself.
More important, he says, is the looming power struggle ahead. Pressure is likely to rise in coming months through trade sanctions, technology embargoes and other protectionist moves reminiscent of the Japan-bashing of the early 1990s.
