Printer Friendly

On valuations of the yuan.

"On June 13th ... the Treasury decided yet again not to brand China a currency 'manipulator' in its semi-annual report on exchange rates, but confidently declared that the yuan was 'undervalued.' And on June 18th the 1MF also announced a new framework for monitoring countries' exchange-rate policies. It will track indicators such as heavy foreign-exchange intervention and 'fundamental exchange rate misalignment' in order to identify countries that are unfairly manipulating their currencies."

"This activity is based on the widespread assumption that the Chinese yuan is hugely undervalued against the dollar. Yet the awkward truth is that it is almost impossible to be sure when a currency is misaligned, let alone by how much. A recent Treasury research paper admitted that there was no fail-safe method to estimate the correct value of a currency. A study by two IMF economists, Steven Dunaway and Xiangming Li, examined eight different estimates of the yuan's supposed undervaluation: they ranged from zero to almost 50 percent depending on the methods and assumptions used."

--The Economist, June 22
COPYRIGHT 2007 International Economy Publications, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2007, Gale Group. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:China
Author:Rees, Matthew
Publication:The International Economy
Date:Jun 22, 2007
Previous Article:On China's stock market.
Next Article:Folly of China bashing.

Related Articles
U.S. pressures China on currency issue, wants free-floating Yuan.
Staying current: as scrap trading becomes more global, currency exchange rates call for more attention.
It takes two to tango: why a big Chinese currency appreciation alone won't cut America's trade deficit.
Arcelor-mittal tops tonnage leaderboard.
Export uncertainty.
My favorite sport.
Behringer Harvard boosts holdings to $3.9b with IPC buy.
QATAR - The Global Oil Perspective.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters