Related News

Home » Business » Economy

Adviser predicts yuan to rise on greenback

CHINA'S yuan is set to rise against a weak US dollar and China's economic growth will recover earlier, a central bank adviser said in remarks published today.

The US Federal Reserve's last week's announcement to buy US$300 billion in Treasury bonds in the next six months is aimed at shoring up base money though it may not have an immediate effect, said Fan Gang, who sits on the People's Bank of China's monetary policy advisory committee.

If liquidity picks up, the threat of inflation in the US is on the rise and the trend for the yuan to appreciate may not change, Fan was quoted by the China Securities Journal today.

The Fed's decision to buy Treasuries triggered concern of a weaker greenback as the Federal Reserve is expected to pump more money into the system and trim the value of the US currency.

Major currencies including the British pound, the euro and Australian dollar gained against the US dollar since the announcement last week while the yuan remained flat against the greenback.

Fan added that the trend for the Chinese economy to recover ahead of the global economic curve was also leaving room for the yuan's appreciation.

China is in a rare position as a major economy that is still growing despite the "Great Recession," as the International Monetary Fund calls the first decrease in the global economy since World War II.

China is very likely to achieve the target of 8 percent economic growth this year while it is less likely that the US, Japan and Europe will bottom out of recession this year, he said.

Premier Wen Jiabao said earlier in March that China will keep the yuan stable and will not bow to external pressure.

The local currency has gained 21 percent against the greenback since July 2005 when China depegged the yuan from the US dollar. While its growth stalled since the middle of 2008. It has lost 0.2 percent this year against the US dollar.

Meanwhile, there has been a "drastic depreciation" in the euro and Asian currencies that has put a lot of pressure on Chinese exporters.

Fan's view is in contrast to a recent State Information Center report, which called for "proper depreciation" of the local currency to back battered exports.

Some economists expect the US dollar to depreciate in the second half.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend