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(business) Chinese Yuan Float Unclear (moved from ATSNN)

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posted on Feb, 5 2005 @ 10:50 PM
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China is promising to float their currency, but they are providing no timetable.
 



olympics.reuters.com
China's yuan is not substantially undervalued given the country's balance of payments, but it will manage capital flows with the aim of eventually making the currency convertible, China's central bank governor said.


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It appears the US continues to pressure China to float their currency, but China continues to stall. If the currency were allowed to float, it would rise substantially given China's vast exports to the US.

However, if the US dollar continues, China will have greater to motivation to float their currency. Another aspect to consider is that China is currently attempting to raise domestic consumption, to buy off their own people. A stronger Chinese currency might help improve their domestic consumption

Although, China probably isn't ready to fully assert its economic might. US exports allow China to gain greater leverage in the US. Attempting to change the economy too quickly, could result in problems from adjustment.




 
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