2015-05-04

Yuan Fairly Valued

Senator Schumer isn't happy:

IMF to brighten view of China’s yuan
The International Monetary Fund is close to declaring China’s yuan fairly valued for the first time in more than a decade, a milestone in the country’s efforts to open its economy that would blunt U.S. criticism of Beijing’s currency policy.

...“It takes the rug out from under the feet of U.S. critics of Chinese currency policy,” said Eswar Prasad, a Cornell University economist and former China official at the IMF. “The U.S. relied to a significant extent on what was seen as the IMF’s objective assessment.”

The Obama administration disagrees with the IMF, maintaining a view that the yuan, also called renminbi, remains “significantly undervalued.”
The idea that the renminbi is undervalued is absurd, if anything it faces risk of significant depreciation in the event of a financial crisis.

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