Commodity producing countries under pressure (political/economic - ALL) - Chinese inflation blowout, interest rate hike (update 10)

A blessing or a curse in disguise as a blessing? Point is as commodity producing export countries were caught in the headlights of market overbidding, particularly hedge finds buying their currencies, after the Federal Reserve were to begin (or have already) further Quantitative Easing. The US dollar weakness and becomes oversold, as most commodity producing currencies and Asian exporting currencies became overbought.

Of course China and the US have been wrangling with the YUAN (CNY) appreciation, whilst US dollar weaknesses continues with huge trade gaps between the producers (China) and the consumers (US).

It ends.

The US could bluff and force China into a situation where the Chinese would inevitably have to allow their currency to strengthen, how? By the US devaluing their currency the Chinese would of course fix their currency at the same rate as the USD; while the USD devalues. The problem of course is that China has an inflation issue, from property and onward to other consumer based goods, which is most likely getting out of control. The Chinese simply cannot allow their currency to be artificially low, by natural laws of consumption; the Chinese are running too hot on a undervalued purchaser tool - the YUAN. The US, with a chairman of the Federal Reserve Bank (Ben Bernanke), who believes in printing; the argument is that the US is still caught in deflationary trap. This is technical because the counter argument is that utilities haven't gone down and costs of living i.e food, oil maintain a steady incline. But, the US is a struggling economy, which is still caught in a recessionary quagmire (high unemployment, declining property values, declining manufacturing etc). If there is a game of strategy here, the US can force the Chinese to increase their YUAN or increase interest rates, on the simple premise that the Chinese inflation problem is greater than the US inflation problem. The US devalues the USD, the Chinese will do the same, but at a cost of inflation spinning out of control

Point being, China has now increased it's interest rates by the one yr yuan lending rate to 5.56% from 5.31%, the one-year yuan deposit rate to 2.5% from 2.25%

This would indicate that 1. China does have a severe inflation problem 2. A slight liquidity problem is occurring. Keeping in mind that the deposit rate is very low.

Last point re: China, they may be losing control of the car. Slight panic has moved up a notch.

China's tightening of their lending rate will spill over to commodity producing countries, as we should see their currency's drop considerably and mining producing stocks effected considerably.