Letter

For lack of economic logic

In "The domino effect of the US rate hike" (China Daily, March 5, 2010), Liu Junhong explains the relation between the interest rates of bank loans, which are decided nationally, and the ultimate repercussions they have on the global exchange rates, for instance among the US dollar, euro and yuan. He concludes that we should heed the International Monetary Fund suggestion - not to withdraw economic stimulus measures too early - and avoid falling victim to the political games played within G20.

On the same day, Andrew Sheng ("Waltzing around exchange rates") started his argument saying that the dollar has had "a good store of value". But can anyone sensible put paper dollars under his/her mattress as a guarantee to possess purchase power in the future. Money has many functions, but only if we store gold or silver coins can it have a store of value.