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Chinese voices begin calling for yuan's rise |
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Written by LNC
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Monday, 02 November 2009 |
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The following article appeared in the China Reform Monitor on October 13, 2009:
"China should have the courage to let the Yuan rise significantly against the dollar to maintain a balanced, market-based exchange rate," Yu Xuejun, director of the China Banking Regulatory Commission of Jiangsu province, has written in Finance Series, a supplement of Caijing magazine. A stronger exchange rate would prevent a further accumulation of foreign exchange reserves, which have soared in recent years. "If the Yuan becomes undervalued, as it used to be, hot money will pour into China, put greater (upward) pressure on China's foreign exchange reserves and worsen China's economic imbalances," Yu warned. Although Washington and the International Monetary Fund among others agree that China's Yuan is undervalued, Yu's views do not reflect official Chinese policy. Yi Gang, a vice central bank governor, said earlier this month that China would stick to its current exchange rate policy, Forbes reports.
[Editor's Note: Yu's concerns are understandable. After barely rising in the first quarter, China's foreign exchange reserves piled up quickly again in the second quarter with a record monthly rise in May of $80.6 billion. China had a total $2.13 trillion in reserves at the end of June.]
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