Foreign Exchange News
- Economist calls for quicker yuan rise
Date: 19-Dec-2006 Sources: (Shenzhen Daily)
THE yuan's modest rise since the government revalued the currency in July 2005 has failed to balance trade or satisfy the market, a domestic economist said.
The country as a result should pursue a more 'appropriate appreciation?in 2007, He Fan, an economist with the Chinese Academy of Social Sciences, wrote in the China Securities Journal.
He did not elaborate on how much the yuan should rise, but said China had underestimated the costs of a slow climb and overestimated the risks of a more rapid ascent.
'The modest appreciation approach will not be helpful in curbing market speculation but will encourage hot money inflows,'He said.
He said the yuan had actually been falling against the euro and the yen because of the U.S. dollar's decline.
But He added that calls from the United States on China to revalue the yuan were counterproductive.
'Political pressure from the United States on China to speed up exchange rate reform will not be helpful. It will create unnecessary trouble,'he said.
However, with or without external pressure, China should allow the yuan to climb more quickly. 'It is wrong to let the yuan rise on U.S. pressure, but it is unwise as well to keep the yuan unchanged to defy U.S. pressure,'he wrote.
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