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Roubini Says China May Let Yuan Gradually Appreciate by May

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Roubini Says China May Let Yuan Gradually Appreciate by May


By Bob Willis and Margaret Brennan

April 13 (Bloomberg) -- Nouriel Roubini, the New York University economist who predicted the financial crisis, said China will allow its currency to appreciate gradually, “possibly as early as May.”

Roubini said China would limit the yuan’s appreciation to a maximum of 3 percent or 4 percent a year due to the economic slowdown and rising social tensions. The move would be enough to allow the Obama administration to say its efforts were paying off, he said in an interview today on Bloomberg Television’s “InBusiness with Margaret Brennan.”

“It’s not at all a game changer, absolutely, but politically that’s the maximum that China can do,” Roubini said in New York. The move would “allow at least the U.S. to signal there is some movement and prevent the U.S. from declaring China as a currency manipulator.”

President Barack Obama yesterday urged China’s President Hu Jintao at a Washington meeting to move to a “more market- oriented” exchange rate. China’s official Xinhua News Agency cited President Hu as replying the country wouldn’t yield to “external pressure” in deciding when to adjust the currency.

U.S. lawmakers say the yuan peg, at about 6.83 to one dollar since July 2008, gives Chinese exporters an unfair advantage and have urged the Obama administration to increase pressure on China to change the policy. The U.S. ran a $227 billion trade deficit with China last year.

A Bloomberg News survey of 19 analysts forecasts China may allow the yuan to appreciate by June 30.

Delayed Report

Treasury Secretary Timothy F. Geithner announced April 3 the delay of a Treasury report on global currency policies slated for April 15.

Delaying the report will give China space to relax currency controls “without looking like they’re kowtowing to U.S. pressure,” David Gilmore, a partner at Foreign Exchange Analytics in Essex, Connecticut, said last week.

Roubini also said the Federal Reserve will keep interest rates near zero through early next year and may resume the policy of securities purchases, known as quantitative easing, aimed at keeping interest rates low.

Roubini said U.S. economic growth probably slowed to an annual pace of 2.5 percent in the first quarter and may be “closer to 2 percent” toward the end of the year.

“That’s the scenario of an anemic, sub-par, below-trend U- shaped recovery,” he said.

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NO MAY..........NO JUNE.......... NOW!!!!

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