Foreign Exchange News
- Yuan seen up 9%-10%
Date: 17-Jan-2007 Sources: (Shenzhen Daily)
China's currency will likely have risen 9 percent to 10 percent against the dollar by the end of this year compared with its value before its one-off revaluation in July 2005, a think tank under the Ministry of Commerce said in a report Monday.
That would suggest a slightly faster pace of yuan appreciation this year. Last year the yuan appreciated around 3.3 percent against the U.S. dollar and has now risen about 6 percent since July 21, 2005, including the 2.1 percent revaluation on that date.
The think tank, the Chinese Academy of International Trade and Economic Cooperation, said in its report that yuan appreciation is a long-term trend that will help China achieve balanced growth in its international trade and economy. It reiterated the government's view that appreciation will be gradual.
It said China had to change the pattern of its trade and its model of economic growth, and yuan appreciation had an important part to play in that process.
According to the report, an appropriate rise in the yuan would do a lot of good for China: It would help to slow growth in China's trade surplus, which rose 74 percent in 2006 to a record US$177.47 billion; it would also spur domestic industry to upgrade, ease tensions with trade partners and stimulate domestic demand.
But the report said it was up to China to decide the rate of the yuan's climb.
The report said an annual appreciation of 3 percent isn't likely to significantly affect China's trade growth, given the limited effect of such appreciation on trade since 2005.
However, the report said China can't exclude the possibility of yuan depreciation, as it is still a developing country with problems such as an inadequate social security net, a large amount of bad loans in the banking system and the need to create jobs for the country's vast work force.
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