Forex Blog: Currency Trading News & Analysis.

March 7th 2005

Chinese Yuan, interest rates remain constant

China’s Central Bank announced today that it will maintain interest rates at current levels, despite foreign pressure to raise them. In the past 9 years, China’s Central Bank has only raised interest rates one time. China’s economy is unusual in that it requires an extraordinary amount of investment (40% of GDP) to continue expanding. As a result, the central bank must maintain cheap and easy access to capital. For many years, Chinese interest rates have been kept below the rate of inflation, allowing investors and entrepreneurs to borrow at negative rates, in real terms. China refuses to capitulate to international pressure, and adjust its exchange rate regime to a floating system. CNN reports:

"We are gradually moving toward allowing the market to determine the yuan’s exchange rate. But there’s no timetable for that to happen," the news agency quoted Guo [a senior Chinese official] as saying.

Read More: Beijing says no move on yuan

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Posted by Adam Kritzer | in Chinese Yuan (RMB) | No Comments »

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© 2004 - 2024 Forex Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.