Yuan ‘undervalued’
(16 April 2010 – China) The International Monetary Fund (IMF) has suggested that increasing the Yuan would not damage Chinese growth if handled correctly, adding that the Yuan is ‘undervalued’.
Federal Reserve chairman, Ben Bernanke, said that the Yuan is ‘undervalued to promote a more export-orientated economy’ and that it would be good for the Chinese to allow more flexibility in their exchange rate to address inflation bubbles within their own economy.
However Mr Bernanke, when challenged by China critic Senator Chuck Schumer, said that while moving the interest rate alone would not have a huge impact over the short-term on trade flows, it would over time create an impact.
The chairman’s remarks comes as expectations continue to rise over whether China will allow its currency to rise, possibly before the G20’s next meeting in June.
The U.S. Treasury recent postponed a decision on whether to label China a ‘currency manipulator,’ an apparent effort to give China some political breathing space to revalue its currency without appearing to bow to U.S. pressure.
However Mr Bernanke, when challenged by China critic Senator Chuck Schumer, said that while moving the interest rate alone would not have a huge impact over the short-term on trade flows, it would over time create an impact.
The chairman’s remarks comes as expectations continue to rise over whether China will allow its currency to rise, possibly before the G20’s next meeting in June.
The U.S. Treasury recent postponed a decision on whether to label China a ‘currency manipulator,’ an apparent effort to give China some political breathing space to revalue its currency without appearing to bow to U.S. pressure.
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