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China To Revalue Yuan

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BEIJING – China (January 12th) – will make a one-off revaluation of the yuan within the first quarter of the year and move to a trade-weighted basket of currencies to set its exchange rate by the second half, investment house Goldman Sachs said on Monday. The measures will lead to a five per cent cumulative […]

BEIJING – China (January 12th) – will make a one-off revaluation of the yuan within the first quarter of the year and move to a trade-weighted basket of currencies to set its exchange rate by the second half, investment house Goldman Sachs said on Monday.
The measures will lead to a five per cent cumulative appreciation over the next 12 months, it said. With low interest rate expectations and yawning current account and budget deficits, the US dollar has been hitting new lows against the euro and other major currencies on an almost daily basis.
This is pressuring China to address its exchange rate policy. Goldman Sachs said that China is then likely to move from a direct US dollar peg. It cited a recent mainland media report which said that the government was considering linking the yuan to a basket of 11 trade-weighted currencies. (MH) source: Singapore Business Times

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