China says no revaluation when forex trading expands<\/p>\n
Agence France-Presse, Beijing<\/p>\n
China's central bank governor Zhou Xiaochuan said on Friday there
\nwill be no revaluation of the yuan when the country expands its
\nforeign exchange trading system next week, quashing intense media
\nspeculation.<\/p>\n
"Media reports on the expected appreciation of the Chinese
\ncurrency, renminbi (yuan), on May 18 are not correct," Zhou was
\nquoted as saying by the official Xinhua news agency.<\/p>\n
"That is definitely impossible. That's only what foreigners
\nhave been saying and only some individuals at that.<\/p>\n
"Can you really take that seriously?" he said.<\/p>\n
Under a previously announced plan, more currencies will be
\nadded to China's forex trading system on Wednesday, sparking
\nspeculation that the People's Bank of China could use the
\noccasion to revalue or widen the yuan's trading band.<\/p>\n
Trading will be broadened to introduce eight new currency
\npairs, including the U.S. dollar against the Hong Kong dollar,
\nJapanese yen, British pound, Swiss franc, Australian dollar,
\nCanadian dollar and the euro, and the euro against the yen.<\/p>\n
Earlier this week billions of dollars of speculative money was
\nlet loose on forex markets worldwide after confused reports --
\nforcefully rejected by the central bank -- that China would
\nrevalue the currency on May 18 at the time of the change.<\/p>\n
Beijing is under fierce pressure to free up the yuan.
\nLegislation pending in the U.S. Congress would impose a 27.5
\npercent tariff across the board on Chinese imports if the peg
\ndoes not go within six months.<\/p>\n
The yuan is currently fixed at about 8.28 to the dollar, a
\nlevel that many of the country's foreign trade partners argue is
\nartificially low and unfairly boosts Chinese exports.<\/p>\n
Although Beijing has repeatedly assured the international
\ncommunity that it is preparing to move towards a more flexible
\ncurrency regime, it has steadfastly refused to reveal a
\ntimetable.<\/p>\n
"We need to design our reforms, including taxation, interest
\nrates and exchange rates, in an effort to solve domestic
\nproblems," said governor Zhou.<\/p>\n
"The key is to follow our own logic to design the starting
\npoint, the target and the process of the reform."<\/p>\n
Analysts argue that Beijing must revalue its currency to
\nsoothe foreign concerns and jittery international markets, and as
\nsuch, a change to the system would have to come soon.<\/p>\n
"Chinese authorities, if they are waiting for a calm moment,
\nthey are not going to get it," said Tim Condon, an economist at
\nING.<\/p>\n
"Most traders feel that revaluation is more likely sooner
\nrather than later and I'm in that camp, with a revaluation coming
\nsometime before the end of June," Condon said.<\/p>\n
Deutsche Bank said China would most likely revalue the yuan in
\nthe second half of the year.<\/p>\n
"The most sensible option ... is an initial widening of the
\ntrading band to around two percent, followed by a three to five
\npercent annual average appreciation over several years within a
\n'managed float' structure," it said in a research note.<\/p>\n
In Washington on Thursday, the International Monetary Fund
\n(IMF) made clear it too felt China was ready and able to reform
\nits currency system.<\/p>\n
"I can only repeat all we have indicated for some time. A
\nflexible exchange rate arrangement would be in China's interest,"
\nIMF spokesman Thomas Dawson told reporters.<\/p>\n
On Thursday, central bank vice governor Wu Xiaoling reiterated
\nthat China would not bow to external pressures to revalue the
\ncurrency and blamed the United States for creating a negative
\nenvironment for any eventual loosening of the yuan peg.<\/p>\n
She said the pressure had resulted in rampant speculation that
\ncurrency reform was imminent, prompting a flood of hot money into
\nChinese assets, especially property, in expectation of an
\nappreciation.<\/p>\n
It had also hamstrung the government's macro-reform policy,
\nespecially as it tries to cool down an overheated economy, she
\nadded.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/china-says-no-revaluation-when-forex-trading-expands-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}