For some time now, American officials and academics have been discussing a possible revaluation of China’s currency, the renminbi, as I wrote in this post from a year ago. The Chinese renminbi has been kept to about 6.83 per U.S. dollar for nearly 2 years.

According to some government officials and Asia-watchers, the current (low) value of the renminbi is at least partly driving the ever-growing trade imbalance between China and the U.S.

Peter Morici, a professor at the University of Maryland and former chief economist at the U.S. International Trade Commission, estimates that the yuan is undervalued by about 40 percent. In 2009, the U.S. imported nearly $300 billion worth of goods and services from China, while sending just $70 billion the other way, according to the U.S. Census’s Foreign Trade division. more

The languishing economy continues to ensnare more businesses, as seen in the number of business bankruptcies. More than 60,000 businesses went bust last year, the highest level in more than 15 years, according to the American Bankruptcy Institute.

Even many companies still up and running aren’t immune from the larger environment. About half of the 4,000 firms participating in a 2009 survey by Roland Berger Strategy Consultants reported difficulties in issuing new loans.

Perhaps that not surprising, given that a similar number were anticipating sales drops of more than 10 percent. To get through, about 60 percent had chopped personnel costs by more than 10 percent.

Bringing costs into line with sales is critical. However, many of these companies still will face challenges, as their operations and cash flow will be smaller than before, says Drew Koecher, head of KPMG’s U.S. restructuring group. “The right side of the balance sheet will be larger than what they can support.” That can lead to a cascade of negative events, which may devolve to bankruptcy. To manage that risk, CFOs and treasurers will want to right-size their companies’ balance sheets: more

On March 15, Senator Christopher Dodd (D-CT) presented an updated version of Restoring American Financial Stability, a bill that’s designed to restore stability and bring transparency to the American financial system. Contained within what’s known as “The Dodd Bill” is a section on over-the-counter derivatives. Here, it appears that the more things change, the more they stay the same.

The language in the ‘‘Restoring American Financial Stability Act of 2010,” which is a revised version of the bill Senator Dodd introduced last year, appears to offer end users, including corporations, an exemption from the requirement to move their derivatives transactions to exchanges. However, that’s not actually the case, says Sam Peterson, senior advisor in the government and regulatory advisory practice with Chatham Financial. “Corporate end users still have to meet stringent conditions” in order to keep their derivatives transactions over-the-counter. What’s more, even if a company meets the exemption requirements, the Commodity Futures Trading Commission (CFTC) doesn’t have to allow the exemption, Peterson adds. more

A recent report by Celent, a research firm focused on financial institutions, contains some insight that applies to corporate treasurers as well as their banking counterparts. The report sports the rather lengthy title, “Strategies for Cash and Trade Finance: Transaction Banking for Regional Banks in OECD and Non-OECD Countries,” and more info on it can be found here.

Perhaps the most significant finding from the report is the idea that trade finance and cash management are converging. Based on Celent’s own research, the two functions work closely together in more than 40 percent of companies; in about a quarter of companies, the two areas both work closely together and are integrated via a technology platform. more

It appears that the economy is slowly and painfully inching toward a turnaround. Unemployment is holding steady at 9.7 percent, reports the Bureau of Labor Statistics. While unacceptably high, the number represents a slight drop from earlier this year. The Bureau of Economic Analysis says that GDP grew at an annualized rate of 5.9 percent in the fourth quarter of 2009.

It all sounds great. And it is. However, a recovering economy can present its own challenges. Most significantly, if companies don’t continue to focus on working capital and cash flow management, they can end up back in trouble. more