CNY Revaluation Rumor Put On Hold, "Conditions Are Not Ripe" Says Senior Government Economist
With everyone expecting that China will now not be branded a currency manipulator once the delayed Treasury assessment is released in 3 weeks, new developments out of China indicate that the country was merely blowing smoke up the administration in its recent visit to Beijing, by promising the CNY would shortly be gradually revalued. Reuters reports that "Zhao Jinping, the deputy head of foreign trade research with the
Development Research Center (DRC), a think-tank under China's cabinet,
said Beijing was not comfortable enough right now to let the yuan rise
because its export sector had not fully recovered." So much for JPY strength due to a CNY reval. Now the JPY will be strong only because the endless carry trade may be unwinding for other Volcanic/Goldmanic reasons. Also, this certainly looks bad for Obama, as his foreign policy is increasingly perceived as a whole lot of bark and no bite: if Jinping speaks for the broader Chinese establishment (and in China nothing happens by accident) it will be evident that the president is simply incapable of bending our largest creditor to our will... as tends to happen when leverage (literal and metaphoric) is involved.
More from Reuters:
The conditions are not ripe for China to unshackle the yuan from its 21-month-old peg to the dollar, a senior government economist said in comments published on Monday.
"As for short-term policies like tax, interest rates and exchange rates, the conditions for them to change in the near term do not exist," Zhao wrote in an opinion piece that was published on the China Economic Times, a newspaper run by the DRC.
But Zhao added: "If China's exports and imports maintain rapid growth through the second and the third quarter, China can exit (from the anti-crisis policies) in an appropriate manner."
Strong signals of a thaw in relations between Washington and Beijing have fanned expectations that China may resume appreciation of its currency soon, or even conduct another one-off revaluation.
Oh well, so much for America's second great export-led golden age starting asap.
h/t Naufal Sanaullah