Home / Knowledge / News / Central Bank intervention expected to stabilize RMB
Central Bank intervention expected to stabilize RMB
08
Dec '08
After months of witnessing stabilization, the RMB has consecutively fallen in recent days and touched the upper limit of the fluctuation range several times against the US dollar. It is believed that China's monetary authority will intervene and guide the movement of the exchange rate by using market forces. The authority will initially implement phased depreciation of RMB exchange rate and have the depreciation rate under control, according to sources.

At present, the Central Bank will have to consider economic growth and the reality of un- employment and act accordingly. Devaluation of the Renminbi, increasing export tax rebate rates and easing money supply are all the policies and measures to aid exporters. In comparison, the cost of depreciation is smallest; its efficiency is highest and does not easily result in other trading partners taking means of retaliation.

From technical point of view, devaluation of the Renminbi is a reaction to appreciation of U.S. dollar in recent times. At present, China manages the rates by means of a floating exchange rate system by pegging RMB to a basket of currencies. The U.S. currency commands the highest weight in the basket of currencies and the devaluation trends have begun, more so since the financial crisis unfolded.

Economic fundamentals also support recent devaluation of the RMB against the U.S. dollar. As a long-term depreciation of the dollar does not conflict against its recent appreciation in the same way they say, a long-term appreciation of the Renminbi also does not conflict against its recent depreciation.

In the long run, China's economy will continue to sustain rapid and sound growth, China will maintain trade surplus and net inflow of capital, the base on which the Renminbi has had a long-term appreciation. But in recent times, China's export competitiveness has been lowered, domestic economy is in downturn and export surplus shows a significant contraction. All these factors put together do not support continued appreciation of the RMB exchange rate.

The Chinese Central Bank is expected to conduct a gradual and phased devaluation. It is expected that the depreciation of RMB exchange rate will at least be 5 percent next year, together with other measures which can help avoid a negative growth rate in exports from the country.

Fibre2fashion News Desk - China

Must ReadView All

Courtesy: Alibaba Group

Apparel/Garments | On 18th Jan 2017

Alibaba forges global alliance to fight counterfeiting

Jack Ma led Alibaba Group has forged an alliance with various global...

Apparel/Garments | On 18th Jan 2017

HanesBrands earns above average scores in CDP 2016

Global apparel and innerwear retailer HanesBrands said it has...

Courtesy: UPM Raflatac

Apparel/Garments | On 17th Jan 2017

New residue free textile label adhesive from UPM Raflatac

Producer of self adhesive label materials UPM Raflatac, has...

Interviews View All

Sanjay Yagnik
Maa Tex Speciality

‘We suggest reducing dosage of sizing chemicals to reduce sludge...

Frank Gossmann
Rotorcraft AG

‘RT3 motto is: Do not check millimetres, check colours.’

Vidhyaa Shankar. S
A Ganapathi Chettiar

'The usage of knits is getting into the boundaries of woven fabrics'

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Suresh Patel
Sidwin Fabric

Sidwin Fabric is a manufacturer and exporter of polypropylene textiles and ...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer Prathyusha Garimella is known for blending...

Robert Brunner
Devereux

Golfwear and menswear brand Devereux is set for greener pastures. Robert...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
January 2017

January 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search