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September 22nd 2005

Policymakers reflect on Yuan revaluation

Today marks the two-month anniversary of China’s landmark decision to revalue the Yuan. American policymakers have since had much time to reflect on the move, and the consensus is predictably, that China still needs to do much more. In theory, because China permits the Yuan to fluctuate .3% daily against a basket of currencies, the Yuan should appreciate by .3% every day. However, China has massive forex reserves and is thus able to maintain the Yuan’s peg fairly easily. In the beginning of November, the US Treasury is scheduled to release a report on currencies, in which it may officially label China a ‘currency manipulator.’ Irrespective of this report, several prominent politicians have threatened to reintroduce legislation that will slap a 27.5% tariff on all Chinese goods. The Washington Post reports:

“We’re still in the very early stages of what is, for them, a new regime,” said Timothy D. Adams, undersecretary of the Treasury for international affairs. “And thus far, I think we — the United States, the G-7 and other institutions — have been both supportive and patient. But we have expectations that greater flexibility will occur over time.”

Read More: ‘Watershed’ Yuan Revaluation Has Made Few Waves

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Posted by Adam Kritzer | in Chinese Yuan (RMB), Politics & Policy | No Comments »

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