Posts Tagged ‘Ren Min Bi’

Yuan value

Monday, January 14th, 2008

As the CNY climbs to 7.27 against the USD, was interesting to read this week’s Economist citing two reasons, neither of which involve Washington:

- Reducing imported inflation, especially for food and raw materials. A question mark is placed on the efficacy of interest rate hikes in stemming inflation that is attributed to “supply-side shocks”.
- Snow-balling costs of holding down the CNY with falling interest rates in the US vs. rising rates in China.

The article notes: “Some economists argue that a big one-off revaluation would help to stem inflows by reducing the expected future appreciation of the yuan. But Chinese policymakers have stressed the need for gradual adjustment. To show that the currency is not just a one-way bet, the PBOC may try to nudge the yuan a bit lower in coming days.”

With rising rents in a lofty ‘08 (am refraining from using the “O” word) coupled with housing budgets set in USD, the data gatherers at firms like ECA will be under pressure not to under quote.

Source: Economist