John Normand: Yuan Is Behaving Like a Grown-Up Currency

The video discusses the appreciation of a currency over the past decade and its impact on the economy, particularly in corporate profits and industrial growth. It explains changes in the currency regime, moving from fixed to a more market-responsive approach. The correlation between the 3-month Libor and offshore yuan rates is analyzed, highlighting the influence of US money market reforms and Fed rate normalization on these rates. The discussion concludes with an outlook on the economic dynamics between the US and China, considering potential future rate changes.

What has been the impact of currency appreciation on the economy over the past decade?

• It has led to increased corporate profits.

• It has improved the economy significantly.

• It has stabilized the currency regime.

• It has caused a decline in industrial growth.

How has the currency regime changed in recent months?

• It has shifted to a fully fixed regime.

• It has become a freely floating regime.

• It now partially responds to market forces.

• It has remained unchanged.

What is the current state of the currency regime?

• Fully fixed

• Freely floating

• A middle ground between fixed and floating

• Completely market-driven

What does the correlation between the US 3-month Libor and the offshore yuan rate indicate?

• The yuan rate is unaffected by US money markets.

• The yuan rate is influenced by the relative cost of money in the US.

• The yuan rate is solely determined by Chinese economic policies.

• The yuan rate is independent of Fed rate changes.

What is a significant factor affecting the Libor and yuan rate correlation?

• Chinese political reforms

• US money market reforms

• Japanese interest rates

• European economic policies