China’s Yuan Might Be At ‘equilibrium’ Level: Wen

Chinese Premier Wen Jiabao (right) and Chinese President Hu Jintao attend the closing session of the annual National People's Congress in Beijing on Wednesday.

BEIJING – China’s premier said on Wednesday its Yuan might have reached an “equilibrium exchange rate,” suggesting future gains against the dollar are limited despite complaints the tightly controlled Chinese currency is undervalued and distorts trade.

The Yuan has gained 30 per cent in value in real terms since 2005 and has moved up and down since September in trading on a Hong Kong market for non-deliverable currency contracts, Premier Wen Jiabao said.

“That shows that the renminbi exchange rate may possibly have reached an equilibrium exchange rate,” Mr. Wen said at a news conference at the end of China’s annual legislative session.

Mr. Wen pledged to create a more flexible, market-based exchange rate system, saying, “We welcome greater elasticity of the renminbi exchange rate.”

Still, his comments are likely to frustrate Washington and other governments that say China’s currency controls keep the Yuan undervalued, giving its exporters an unfair advantage and swelling its multibillion-dollar trade surplus. Some American lawmakers are pressing for higher tariffs on Chinese goods if Beijing fails to act faster.

Source: http://www.thehindu.com/business/Economy/article2993579.ece

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Posted by WoodlawnPost on Mar 14 2012. Filed under Currency. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

China’s Yuan Might Be At ‘equilibrium’ Level: Wen

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