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Forex chief: Don't betting on RMB appreciation
(Xinhua)
Updated: 2004-03-08 08:54
To bet on appreciation of Chinese currency Renminbi is likely to pay high
prices, warned a top forex official on Sunday in Beijing.
Guo Shuqing, director-general of the State Administration of Foreign Exchange
(SAFE) and member of the National Committee of the Chinese People's Political
Consultative Conference, said that the RMB appreciation anticipation is expected
to ease this year as economies of the United States and other developed
countries are showing clear signs of recovery, which would result in backflow of
the US dollar and ease China's excessive supply of foreign exchange.
It is widely believed that the US Federal Reserve is likely to raise interest
rates in the middle of this year and that will narrow the gap with RMB in
interest rates, he said.
China has already recorded deficit in its foreign trade so far this year, the
director said. Although it is hard to predict for the whole year, China's trade
surplus is likely to be reduced. This, plus the rebound of inflation and the
worrisome assets bubbles, would thwart the RMB appreciation anticipation.
He reminded domestic enterprises and residents of the risks involved in the
fluctuation of exchange rates and told them to be on the alert against risks in
order to prevent unnecessary losses.
"Betting on RMB appreciation is likely to pay enormous prices," he warned.
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