Just days after the US Senate passed a bill aimed at forcing China to allow the renminbi to appreciate, currency trading in Hong Kong suggests that the currency is too strong against the dollar, Bloomberg reported. The currency fell as much as 1.1% on Wednesday, to a record 2.4% below the prevailing rate in Shanghai. Some analysts say that the currency’s weakness in Hong Kong suggests doubts about the Chinese economy: Offshore renminbi in Hong Kong have traded at an average discount of 1% for almost four weeks, as demand for dollars rises amid the crisis in the eurozone. A Senate bill passed on Tuesday would allow for sanctions on countries with mis-aligned exchange rates. China’s foreign ministry has denounced the proposed legislation as “protectionism.”
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