China Indicated A More Flexible Renminbi
China’s signal of an end to the renminbi’s fixed rate to the US dollar will help accelerate a shift toward domestic demand as the prime driver of growth and ease strain with other nations caused by its long reliance on exports. The People’s Bank of China two days ago indicated that it is abandoning the RMB6.83 peg to the US dollar adopted during the global crisis in July 2008 to shield exporters. Before the exchange rate was explicitly re-pegged in July 2008, China had allowed a 21% appreciation of the renminbi vis-à-vis the US dollar over three years. Despite indicating its intention to increase the flexibility of the exchange rate, the People’s Bank of China said that there is no basis for large scale moves in the currency.
The World Economy... - 21/6/2010
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