China may re-value yuan
(17 February 2010 – China) In an effort to slow China’s rapid economic growth, the nation’s central bank has considered strengthening the yuan by as much as 5 percent, according to Goldman Sachs’ chief economist, Jim O’Neill.
Mr O’Neill told Bloomberg News that he strongly believes the central bank is close to moving the exchange rate.
China may allow the yuan to rise as much as 5 percent in a one-time revaluation, Mr O’Neill added.
The chief economist also added that the move would then allow China to trade within a bigger band or against a larger basket of currencies.
China has taken a raft of measures recently to stem inflation and slow economic growth.
Earlier this month, the nation’s central bank called for stricter controls to be placed around new credit as January lending increased to 1.39 trillion yuan (A$22.8 billion).
According to the World Bank, China’s economy is expected to grow around 9 percent this year; global growth is currently expected to sit around 2.7 percent.
However, Mr O’Neill said he believes the nation will experience growth of around 12 to 14 percent if measures are not taken, reported Bloomberg News.
China may allow the yuan to rise as much as 5 percent in a one-time revaluation, Mr O’Neill added.
The chief economist also added that the move would then allow China to trade within a bigger band or against a larger basket of currencies.
China has taken a raft of measures recently to stem inflation and slow economic growth.
Earlier this month, the nation’s central bank called for stricter controls to be placed around new credit as January lending increased to 1.39 trillion yuan (A$22.8 billion).
According to the World Bank, China’s economy is expected to grow around 9 percent this year; global growth is currently expected to sit around 2.7 percent.
However, Mr O’Neill said he believes the nation will experience growth of around 12 to 14 percent if measures are not taken, reported Bloomberg News.
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