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The Major Adjustment Of China'S Exchange Rate Policy Is Postponed Until Next Year.

2010/8/14 12:18:00 42

Exchange Rate Policy Adjustment

China set the dollar to the seven week high on Thursday, allowing the yuan to weaken.

This is not the right year for China.

exchange rate

Another signal for major adjustment of policy.


China's next major policy adjustment may at least wait until next year.

Economics

It is time to restore growth momentum.


Judging by the comments made by some officials, China still does not want to let the yuan rise sharply.

Xia Bin, a consultant to the Central Bank of China, said that the fall of the renminbi was a normal trend on Thursday and a part of the managed floating exchange rate policy.


Since the decision to increase RMB exchange rate flexibility in June, the Chinese government has repeatedly stressed that the RMB exchange rate movements will be gradual.

Up to now, the renminbi has risen 0.6% against the US dollar.

In the meantime, the yen has set a new high against the US dollar, which theoretically gives the Chinese government some room to allow the renminbi to appreciate.


China has its reasons for doing so.

China's domestic economy has weakened slightly, and the recovery of the US and European economies is worrying.


Some worry that the US economy may fall back into recession again, which prompted the Federal Reserve to decide on Tuesday to take more stimulus measures to buy long-term treasury bonds from its mortgage-backed securities.


Although some countries such as the United States have always wanted to see China expand domestic demand and reduce its dependence on exports, it is not the best time to carry out the above adjustment.


China announced Tuesday

Trade

Data show that import growth slowed down in July, while export growth also decreased compared with June.

Industrial output and investment figures released on Wednesday showed that China's economic growth slowed down earlier this year, while China's GDP grew 10.3% in the second quarter compared with the same period last year, an increase below 11.9% in the first quarter.


Earlier this year, China tightened credit standards and took steps to curb the real estate market to prevent overheating and inflation.

However, some people worry that the economy may be slowing down significantly, and policymakers may be very concerned about this risk.

This means that the current RMB exchange rate policy will not be significant.

adjustment


Global economic recovery in the second half of next year

InMomentum

It may be the right time for China to make another major policy adjustment when it becomes more reliable.

At that time, the Chinese government may relax the daily fluctuation range of the RMB, allowing the renminbi to rise or down by 1% against the US dollar.

At present, the daily fluctuation range of RMB is 0.5% of the middle price.


The Central Bank of China said last week that macroeconomic policy is facing a dilemma, which means that China will seek to maintain policy stability in the near future.

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