China’s real exchange rate is undervalued by an estimated 5-10%, adjusted for inflation, Bloomberg reported, citing an IMF report published today. The IMF report, dated June 20, assessed the real effective exchange rates of 28 countries and the euro zone. The report stated that while China’s exchange-rate reform in 2005 saw a 35% appreciation in the yuan, the real effective exchange rate had been depreciating. The exchange rate is “only 14% above the level reached a decade ago, which appears somewhat below the significant increases in China’s productivity relative to trading partner over the past 10 years,” the report said.
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