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BIZCHINA / Top Biz News |
'RMB's rise should be controlled'By Xu Binglan (China Daily)Updated: 2007-03-05 09:10 renminbi's appreciation by controlling the pace of the currency's rise in value, said Justin Lin Yifu, a well-known economist.
"We should stick to the approach of ensuring adjustments (to the yuan's exchange rate) are small in scale and bearable," said Lin, a professor at Peking University. The annual lending rate in the international market is about 5 percent, while the renminbi's annual interest rate for savings is 2 percent, so a 3 percent or bigger increase in the yuan's value would make speculative activities aimed at appreciation profitable, Lin said. In July 2005, China abandoned the renminbi's decade-old peg to the US dollar and allowed its currency to appreciate by 2.1 percent. Since then, the yuan has gained almost another 5 percent against the dollar. However, the United States blames its colossal trade deficit on what it claims is a seriously undervalued renmibi and has been pressing China to allow for a bigger revaluation. Noises from the US, together with China's swelling trade surplus, have
encouraged speculators to bet that the renminbi will appreciate at a quicker
pace.
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