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China central bank may appreciate yuan

Scott Tong Nov 12, 2009
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China central bank may appreciate yuan

Scott Tong Nov 12, 2009
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TEXT OF STORY

Steve Chiotakis: The dollar lost ground today against a surprise currency: the Chinese yuan, or RMB. Washington and Asian governments have argued that China needs to appreciate its currency. And there are signs it might happen. Just not sure when. From Shanghai, here’s Marketplace’s Scott Tong.


Scott Tong: China central bank signaled that it could let its currency appreciate. The currency’s exchange rate does not fluctuate because it’s pegged strictly to the dollar.

David Cohen is with Action Economics in Singapore.

David Cohen: During the height of the crisis, the dollar was strengthening against most other currencies on a flight to safety, and now the dollar is now weakening.

A weak RMB, or yuan, helps China’s exporters. But it also creates problems for Beijing. It makes other exporting countries less competitive, and therefore furious at China. And it creates inflation risks. Cohen thinks appreciation is coming, it’s just a question of when. And central bankers aren’t exactly direct about their intentions.

Cohen: You know, they call it transparency, but it doesn’t mean they have to be clear about what they’re saying.

In Shanghai, I’m Scott Tong for Marketplace.

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