Forex Blog: Currency Trading News & Analysis.

December 13th 2007

OECD: Chinese Yuan Still Too Low

The Organization for Economic Cooperation and Development (OECD) recently issued a report on the Chinese Yuan, which thoroughly assessed the currency’s appreciation since it was “revalued” over two years ago.  While the Yuan has technically risen over 10% against the USD, the OECD concluded that in real terms, the currency has actually fallen. The official rate of inflation hit 6.5% this year, and international economists reckon the true figure is probably much higher. Furthermore, the
government recently revised its estimate for full-year GDP growth to 11.4%, which means price levels may rise further, eating into the real value of the RMB.  In fact, the OECD estimates that the Yuan remains undervalued by as much as 40% and views the “solution” as a combination of tighter monetary policy and looser exchange rate policy.  The Associated Press reports:

While the report did not directly criticize China’s foreign exchange controls, it noted that efforts to tighten money supply to counter inflation were not having much impact.

Read More: OECD Says China Grip on Yuan Too Tight

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

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