China’s capital outflows surpassed US$500 billion in the year’s first eight months, peaking at around US$200 billion during August’s stock market turmoil, The Financial Times reported, citing new calculations by the United States Treasury. In its semi-annual report to Congress on the global economy the treasury also dropped its previous assessment that the yuan was “significantly undervalued”, instead asserting only that it was “below its appropriate medium-term valuation”. “Market factors are exerting downward pressure on the RMB at present, but these are likely to be transitory,” the treasury said. Among those factors was the unwinding of carry trades betting on the appreciation of the renminbi, treasury economists wrote.
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