The Purchasing Power Parity Theory Works – Illustrated by the Sad Tale of the Argentine Peso

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© 2021, Farok J. Contractor, Distinguished Professor, Management & Global Business, Rutgers Business School On  November 8, 2021, it happened — as predicted by the purchasing power parity (PPP) theory: the Argentine monetary unit crossed the symbolically important threshold of 100 pesos = 1 US dollar (USD). A lurid but sad tale. A century ago, … Continue reading The Purchasing Power Parity Theory Works – Illustrated by the Sad Tale of the Argentine Peso

The US-China Business Relationship: “Bi-Polar”? Or a Stabilizing Pillar of the World Economy? A Video Lecture

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© 2020, Farok J. Contractor, Distinguished Professor, Rutgers Business School, and President-Elect, Academy of International Business Introduction to a public lecture sponsored by the Academy of International Business and the University of Nottingham (China, Ningbo Campus) VIDEO LINK Talk approximately 60 minutes followed by Q&A of 30 minutes Just two countries, China and the US, … Continue reading The US-China Business Relationship: “Bi-Polar”? Or a Stabilizing Pillar of the World Economy? A Video Lecture

Argentina Seems Headed for Another Currency Crisis (and Perhaps Default)

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© 2020, Farok J. Contractor, Rutgers Business School In many dozens of emerging nations, perhaps as many as sixty of them, the government interferes in the foreign exchange market to prevent, or delay, the devaluation of its currency. Featured Image Credit: ngcoin.com A recent article from the Financial Times (FT)[1] about Argentina’s peso is yet another illustration … Continue reading Argentina Seems Headed for Another Currency Crisis (and Perhaps Default)

The Quarreling Couple That Still Needs to Dance Together: A Webinar Addressing US-China Rivalry and Cooperation

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© 2020, Farok J. Contractor, Rutgers Business School The two biggest economies on the planet—the US and China, constituting 40 percent of the entire world’s Gross Domestic Product (GDP) and 23 percent of its population—need to cooperate for the sake of humankind. And yet, over the last four years, tensions between the two nations have … Continue reading The Quarreling Couple That Still Needs to Dance Together: A Webinar Addressing US-China Rivalry and Cooperation

Trump Administration Labels China a “Currency Manipulator”: What’s behind the accusation, and who’s right?

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© 2019 Farok J. Contractor, Rutgers Business School At 5 o’clock in the morning on August 5, 2019, unable to sleep, Trump tweeted about China—not for the first time accusing it of being a “currency manipulator,”[1] and describing this as a “major violation.” (See Figure 1 below.) Treasury Secretary Mnuchin followed with an official announcement … Continue reading Trump Administration Labels China a “Currency Manipulator”: What’s behind the accusation, and who’s right?

Advantages and Drawbacks of Undervalued Versus Overvalued Currencies

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© 2019 Prof. Farok J. Contractor, Rutgers University UPDATE: See the August 11, 2019 post: Trump Administration Labels China a “Currency Manipulator”: What’s behind the accusation, and who’s right? Also See the Companion Post:  Is the Indian Rupee Undervalued or Overvalued? What Purchasing Power Parity Theory Tells Us Currencies can be undervalued (very devalued) for natural reasons, … Continue reading Advantages and Drawbacks of Undervalued Versus Overvalued Currencies

Four Salient Facts about the Chinese Yuan

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© 2017 Farok J. Contractor, Rutgers Business School On February 23, 2017, just hours after his new Treasury secretary pledged a more methodical approach to analyzing Beijing's foreign exchange practices, President Donald Trump declared: "Well...I think they're grand champions at manipulation of currency. So I haven't held back.... We'll see what happens."  — Reuters Four Salient Facts: … Continue reading Four Salient Facts about the Chinese Yuan

Update: Is China a “currency manipulator”? Donald Trump says so

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SEE UPDATED POST, AUGUST 11, 2019: Trump Administration Labels China a “Currency Manipulator”: What’s behind the accusation, and who’s right? © 2016 Prof. Farok J. Contractor, Rutgers Business School This article is a 2016 update of my original post of November 16, 2015. It has also been published on The Conversation as Does China manipulate its currency … Continue reading Update: Is China a “currency manipulator”? Donald Trump says so

IMF Elevates Yuan to Elite Currency Status: So what?

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© 2015 Prof. Farok J. Contractor, Rutgers University Governor of the People’s Bank of China (China’s central bank) since 2002 and a cautious and methodical bureaucrat, Zhou is the essence of his country’s Mandarin class: canny and understated, but relentless in his objective to elevate China’s economy and currency to elite status. Under Zhou’s watch, China’s exports … Continue reading IMF Elevates Yuan to Elite Currency Status: So what?

Is China a “currency manipulator”? Donald Trump says so

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© 2015 Prof. Farok J. Contractor, Rutgers University After 20 years, the Chinese government must be used to it—being bashed by US politicians and Congress as a “currency manipulator.” Indeed, the exchange value of the yuan (or renminbi [RMB]) is fixed each morning by its central bank, the People’s Bank of China (PBoC), with a … Continue reading Is China a “currency manipulator”? Donald Trump says so