I Get By With Alittle Help From My Friends....

Dinar Outcast


You are not connected. Please login or register

Developing world joins clamor vs yuan

View previous topic View next topic Go down  Message [Page 1 of 1]

1 Developing world joins clamor vs yuan on Thu Apr 22, 2010 3:44 pm

littlekracker


Developing world joins clamor vs yuan
April 23,2010

SINGAPORE -- China has fought a long-running battle with Washington over its currency, but now its key developing partners are joining the fray in pressing for a stronger yuan to reorient world trade.

The criticism from the likes of Brazil and India risks denting China’s argument that the United States has a self-serving interest in eroding its new economic and diplomatic prowess.

Brazil, Russia, India and China form the so-called BRIC group of countries -- which Beijing has promoted as a counterweight to Western domination of financial affairs in fora such as the G20, which meets in Washington this week.

But both Brazil and India have now gone public with their preference for a gradual appreciation of the yuan, which they say would level the playing field for their own exports.

Their comments have made it “much more challenging for China to argue it is the developed world ganging up on the developing world,” said Ben Simpfendorfer, a Hong Kong-based economist at Royal Bank of Scotland.

“They also make it more challenging because China likes to play the leader of the developing world. It is clearly challenging to do this while your exports are producing job losses in the developing world,” he said.

Chinese leaders have long rejected US, and European, complaints it grabs an unfair trade advantage by keeping the yuan artificially weak against the dollar.

During the global crisis of the past two years, the currencies of most developing countries gained against the enfeebled dollar, making their exports more expensive compared to China-made goods.

“This has given rise to spreading awareness that emerging markets are effectively subsidizing China’s expansion,” said a commentary by Moody's Economy.com.

“Evidence that China’s currency is overvalued is growing stronger, and the voices of those demanding a correction are becoming louder.”

On Tuesday, Reserve Bank of India governor Duvvuri Subbarao said China was among the countries that keep their currencies “artificially low” and as a result, “our exports get hurt.”

“So I am sure that if China revalues the yuan, it will have a positive impact on our external sector,” he told reporters in Mumbai.

Brazil’s central bank chief Henrique Meirelles believes a yuan revaluation is “absolutely critical for the equilibrium of the world economy,” according to Thursday’s Financial Times.

In the United States last month, Singapore Prime Minister Lee Hsien Loong said China “should revert to where they were before the financial crisis and allow the yuan to go up gently again.”

While a stronger yuan will raise some costs, it can also help douse inflationary pressures in China itself, he said, echoing the International Monetary Fund which said Wednesday that a yuan realignment was “essential.”

A senior Southeast Asian finance official told AFP his country would also like to see the yuan strengthen, but said the sense among his regional colleagues was not to comment publicly.

“No one wants to displease China, basically,” he said on condition of anonymity.

China has defended the yuan’s peg against the dollar -- which since mid-2008 has stood at a rate of about 6.8 -- as necessary to protect jobs and prevent social unrest in its dramatically changing economy.

But with China’s economic growth projected at sizzling rates of 10% this year and next, a revaluation of the yuan is both in China’s interests and the world’s, the IMF said in its report. -- AFP

View previous topic View next topic Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum