According to a report by the Ministry of Finance’s research institute, Beijing should "actively guide" the renminbi’s exchange rate to about RMB6.3 against the US dollar to help maintain economic growth and boost employment, Bloomberg reported, citing state media. The report also said the country should increase the amount of commodities that it purchases from abroad and build up its energy reserves in order to prevent positive pressure on the renminbi’s value against the dollar. The authors also advocated cutting bank lending rates to boost real estate investment and to prop up the stock market. Li Wei, a Shanghai-based economist at Standard Chartered Bank, said that depreciating the currency would be of little help, as the drop in exports is due to a lack of demand caused by the global economic slowdown, and would also provoke protectionist sentiment abroad. “I don’t think this report can represent finance ministry policy,” Li said. The People’s Bank of China has said it wants to avoid "big movements" in the renminbi’s exchange rate and that the global economic slowdown would play a key role in the country’s currency policy.
You must log in to post a comment.
Yes, I would like to receive emails from China Economic Review. (You can unsubscribe anytime)
Copyright © 2018 SinoMedia Group Limited All rights reserved