The Chinese central bank's decision to improve its foreign exchange rate formation system is market-oriented and helpful in sending the RMB into the Special Drawing Right (SDR) of the International Monetary Fund (IMF), US experts said Tuesday.
Earlier in the day, the People's Bank of China (PBOC) announced the decision to improve its central parity system to better reflect market development in the exchange rate between the renminbi against the US dollar.
"The IMF has a number of issues for the Chinese to consider changing ahead of SDR basket acceptance. One of those is the shift to a more market-set currency rate," Robert Savage, CEO of CC Track Solutions, told Xinhua.
"This move to make the fixing more market-oriented will be supported by the IMF," he said.
Chris Low, chief economist for FTN Financial, also noted that China's markets are more open than ever in an effort to meet the requirements of the IMF and join the SDR.
Meanwhile, the experts dismissed the idea that the Chinese central bank's move aims to gain a competitive advantage in exports.…
Greater exchange rate flexibility is important for China as the country strives to give market forces a decisive role in the economy and is rapidly integrating into global financial markets, the spokesperson said.
The IMF also said it believes China can achieve an effective floating exchange rate system within two or three years.
The US Treasury said it would continue to monitor the Chinese central bank's move, reiterating that policies that reflect China's desire to move towards a consumption-driven economy are in the best interests of China and the United States.
"While it's too early to judge the full implications of the change in the PBOC reference rate, China has indicated the changes announced today are another step in its move to a more market-oriented exchange rate," the Treasury said in a statement.Best analysis I've seen so far.
Want China Times (Taiwan)
US experts, IMF support China's move to improve FX formation system
Xinhua
US experts, IMF support China's move to improve FX formation system
Xinhua
When China's central bank unexpectedly adjusted its yuan central parity system, it triggered the currency's biggest decline in decades.
So, what exactly happened?
On Tuesday, the People's Bank of China (PBOC) changed the way it calculated the yuan central parity rate, to close the gap between the rate and the actual trading rate on the money markets.
From Tuesday, the central parity rate has taken into account the previous day's inter-bank market closing rate, supply and demand in the market and price movements of other major currencies.
Ma Jun, a central bank economist, described the change to the way the central parity rate is calculated as a "one-off" technical correction that should not be seen as the beginning of a devaluation trend.…
2 comments:
A couple of other takes:
http://news.stanford.edu/news/2015/august/devalued-china-currency-081315.html
http://online.barrons.com/articles/3-experts-on-chinas-shock-currency-move-1439276274
In other words: China is moving to market driven exchange rates just as it's convenient for them to do (moving from an investment-driven economy to a consumer-driven economy).
IGNORING what the corrupt West ideology would have liked in the past. All the West corporate freebooters won't be able to assault China as much as they would like though, and the government still retains most control over the economy.
Post a Comment