Fergie's Tech Blog

China's currency move may hurt U.S. tech

Alorie Gilbert writes in C|Net News:

China's decision to revalue its currency may play well in Washington, but it could raise hackles among Silicon Valley executives and their customers.

The government of China said Thursday that it will base the exchange rates for its yuan on a "basket" of different currencies rather than maintaining a strict ratio with the U.S. dollar, a decision that's expected to cause the yuan's value to rise. Though they did not say which currencies are in that basket, the move resulted in an immediate 2 percent appreciation of the yuan to 8.11 per dollar.

The country had long been criticized for policies that kept the value of China's currency low and exports to the United States and Europe high.

Few expect the U.S. and European trade deficits with China to change appreciably because of the revaluation, but the surprise currency-strengthening move could be a double-edged sword for the high-tech industry.

posted by Fergie @ 7/22/2005 07:37:00 AM