Jim Rogers Talks Chinese Yuan Peg, Urban Real Estate Bubbles, Trade Wars, USD/CNY Chart (BNN, 3/18/2010)

Summary of what he said about China's currency peg and potential trade wars between China/US on the Business News Network out of Canada (BNN.ca video link).  Rogers called the bottom in the US Dollar Index late last year at 75 (link), it's now at 80.75.

  • "I would try to explain to the Chinese that it's good for China if their currency's allowed to float.  Right now all that money is trapped in China and they have various bubbles developing.  It always happens when money cannot escape an economy and there's a lot of money floating around, sloshing around".
  • "Right now they have apparently in my mind real estate bubbles developing in many urban cities and of course if the currency goes higher then everything they import is cheaper.  And that's good for China and the Chinese".
  • "The Chinese know this by the way Andrea, they know that they can never be a great international economy unless their currency floats.  You can't have a blocked currency and be a major player on the world stage, they know that, they've let their currency rise some in the last 2-3 years....."

Recently China Minister Chen Deming said the trade gap was not the result of the weak yuan, but US trade restrictions. Read this Bloomberg story: "China Says U.S. Wouldn’t Sell Helicopter Parts Needed in Relief" (link). Chen said protectionism would "raise the risk" of a double dip recession (or perhaps a global great depression...). It doesn't hurt to watch USD/CNY.

US Dollar/Chinese Yuan (Yahoo Finance)