Tag Archives: Exchange Rate

Misinterpreting Chinese Intervention in Financial Markets
The lens of government intervention in China has led foreign observers to misinterpret some of the most important developments this year in the foreign exchange market and the stock market.
Why Fuss over RMB Depreciation?
The shifting exchange rate reflects the strength of the dollar, not weakness of the RMB. The two nations and business communities should focus on identifying the complementary sectors and products of the two countries and seeking a sustainable pattern of stable growth based on mutual benefit.
New RMB Exchange Rate Reform Must Obtain International Credibility
A long-term stable RMB exchange rate with a two-way volatility is conducive to maintaining the financial asset price, to preventing a large-scale capital outflow, to controlling foreign-debt risk, to reducing the cost and burden of debt financing and to stabilizing economic growth anticipation.
RMB Exchange Rate Will Become More Volatile
As China allows the market to determine the RMB exchange-rate regime the rate will become more volatile. That market orientation is just what the West has long sought, and it will serve global interests whether it goes up or down.
China Sheds Its Dollar Fetters
Shrill forebodings of a return to ‘currency wars’ and irremediable U.S.-China trade quarrels are overblown – although the prognosis on this front is somewhat mixed. A small step backwards (the yuan devaluation on August 11th) might yet come to reflect the biggest leap forward in Asian economic, trade and financial regionalism in the years and decade ahead.
RMB Devaluation: It’s Not the Economy, Stupid!
The 1.8% devaluation of the yuan has started a debate in China-watching circles about whether or not the People’s Bank of China is trying to make the RMB more market-determined, or trying to make boost its exports. Most likely, Beijing is allowing the RMB to find its feet before the IMF review in November.
Will RMB Exchange Rate Continue to Depreciate In the Second Half of the Year?
Although the degree of depreciation could be determined by how the Chinese government weighs the advantages and disadvantages of RMB exchange-rate movement, market forces play a more important role, and investors must pay close attention to this.
stock market
What Next for China? Market Lessons to Build on
The tremendous volatility of China’s markets has led to direct and indirect government involvement, which is ultimately a short-term fix. Beijing must re-commit to the opening of its financial markets and to a deepening of capital market reforms.
The Short and Long of China’s Stock Market Crash
The government’s aggressive response in stabilizing “Uncle Xi’s bull market,” has highlighted the political nature and disconnect between the stock market and overall economic health. The government must decide whether to continue its efforts to open the capital account and liberalize the exchange rate.
Currency Enforcement Clauses Have No Place in the Global Trading System
Protectionist U.S. Congressmen are proposing a series of amendments that would enforce currency disciplines for China-U.S. cross-border trading. Rather than protecting import-sensitive sectors with that would penalize developing country producers, Congress and global policymakers would be better off updating the fraying architecture of the international monetary system.
IMF: Renminbi Now ‘Fairly Valued’
China’s monetary goals call for increased consideration of market supply and the exchange rates of basket currencies, guidance of market expectations, and maintenance of a stable renminbi exchange rate. The IMF recently said the RMB is now “fairly valued”, which bodes well for the inclusion of the RMB into the Special Drawing Rights currency basket of the IMF before the end of 2015.
Time to Unpeg the Chinese Renminbi
The Chinese economy is simply too big to remain tied to the once useful monetary anchor of the renminbi–U.S. dollar peg. It is time to let it go. In the short term, it would help deliver a warranted Chinese monetary easing by helping to stabilise the effective exchange rate and to facilitate an orderly unwinding of the Chinese corporate carry trade.
Congress, China, and Currency Manipulation
“Currency manipulation,” or unfair undervaluation, especially on the part of China as seen by the U.S., is a concept that is exceedingly hard to pin down from an economic viewpoint. It is true that China runs a bilateral surplus with the U.S., but as Jeffrey Frankel shows, this has little meaning for the exchange rate and competitiveness of their exports.
Steady on the Renminbi
The renminbi has appreciated sharply over the past several years, exports are sagging, and the risk of deflation is growing. Under these circumstances, many suggest that a reversal in Chinese currency policy to weaken the renminbi is the most logical course. That would be a serious mistake.
Will the RMB Enter A New Round of Depreciation?
China’s Central Bank is assessing changes in its international monetary policy in the following areas: RMB internationalization, becoming less dependent on U.S. Federal Reserve monetary adjustments, and containing the arbitrage of foreign speculative investment. With a major focus on the dispossession “outstanding funds for foreign investment,” the RMB is expected to experience moderate depreciation or fluctuation.
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