Wednesday, December 28, 2011

Chinese yuan still undervalued: US Treasury

WASHINGTON (AFP) - The US Treasury said on Tuesday that China's currency is still significantly undervalued, but it refrained from saying Beijing manipulates the currency, which could lead to retaliatory action by Congress.
'The real exchange rate of the renminbi (RMB) is persistently misaligned and remains substantially undervalued, though the degree of this undervaluation appears to have declined significantly,' the Treasury said in a semi-annual report to Congress.

The Treasury said the currency, also called the yuan, had risen 7.5 per cent against the dollar in the 18 months since Beijing began allowing a managed appreciation, and by 12 per cent if China's high inflation rate is figured in.
Based on that, on China's shrinking current account surplus and on Beijing's commitment to make the yuan more flexible, Treasury said it could not conclude that the currency was being manipulated to boost its exports to the United States.

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