Yuan is close to equilibrium rate: Economist

Updated: 2011-11-28 09:53


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BEIJING - China's RMB, or the yuan, is getting close to the equilibrium value, a government think tank economist said, refuting the US accusation that the currency is undervalued.

The yuan's previous downward moves and the slowing growth of China's foreign exchange reserve signalled the currency "may" already have entered a new stage, Li Yang, vice president of the Chinese Academy of Social Sciences at a finance forum.

According to latest statistics, the country's forex reserve increment in the third quarter was $50.9 billion less than that of the second quarter, dragged down mainly by the narrowing trade surplus.

Li's viewpoint on the currency's equilibrium was echoed by Shen Jianguang, chief economist with Hong Kong-based Mizuho Securities Asia, who also refuted the US claims that the RMB has space to further appreciate about 20 percent.

He said the United States may have drawn conclusions from the International Monetary Fund's (IMF) forecast on China's balance of payments, which is not true.

China's trade surplus has been shrinking significantly this year, accounting for 2 percent of its gross domestic output, well below the IMF's forecast of 6 percent, Shen said.

A report issued by the PBOC's financial research center last month said the RMB has risen against the dollar by 30.2 percent since July 2005, when China started to reform its currency mechanism.

However, US officials have repeatedly accused China of keeping its currency artificially low to help exports, despite the yuan's continued appreciation.