Sharp yuan rise could cause chaos - researcher
(Reuters)
Updated: 2006-09-11 11:46
BEIJING - China must not allow the yuan to appreciate too
rapidly for fear of creating an investment bubble that could burst with
disastrous effect, a senior researcher said in an article published on Monday.
Countering recent calls for a
quicker rise in the yuan, Yi Xianrong from the Chinese Academy of Social
Sciences (CASS) said a swift climb in the currency would spur capital inflows
and expectations of further gains.
The government should be on the watch
on the appreciation of (the) renminbi, according to Yi, who works at CASS's
Institute of Finance and Banking.
"If the fund managers and investment bank governors could have their way, the
revaluation of (the) renminbi in large margins could only yield economic chaos
which would not be easy to control."
Beijing revalued the yuan, or renminbi, by 2.1 percent against the dollar in
July 2005 and it has risen a further 2 percent since.
A consensus has been building among government economists that China needs
faster appreciation to slow growth in the country's foreign exchange reserves,
which have swelled as the central bank buys dollars to keep the yuan steady.
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